Mobile Phone Shipments Will Fall 1.6% in 2016, but Will Return to Growth in 2017

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Gartner, Inc. said worldwide combined shipments for devices (PCs, tablets, ultramobiles and mobile phones) are expected to decline 3% in 2016 (See Table 1). This will mark the second consecutive year of decline. The global devices market fell by 0.75% in 2015. 

"The global devices market is not on pace to return to single-digit growth soon," said Ranjit Atwal, research director at Gartner. Growth is on pace to remain flat during the next five years. All segments are expected to decline in 2016, except for premium ultramobiles and utility mobile phones (entry level phones), which are expected to show single-digit growth this year. 

The Ultramobile (Basic and Utility Tablets) category includes devices such as, iPad, iPad mini, Samsung Galaxy Tab S2, Amazon Fire HD, Lenovo Yoga Tab 3, Acer Iconia One 

PC Market to Bottom Out in 2016 and PC Prices in the UK to Increase Less Than 10 Percent in 2017 

The PC market is expected to exhibit an 8% decline in 2016, as the installed base bottoms out and replacement cycle extensions halt. "The effect of currency depreciation on the market is diminishing," added Mr. Atwal. "The second quarter of 2016 was the first since the second quarter of 2015 least impacted by currency depreciation." Regions such as Western Europe, where the Euro depreciated significantly in 2015 and PC prices increased, finally showed flat market growth (-0.9%) in the second quarter of 2016. This follows four consecutive quarters of decline. 

If this situation prevails it means that PC sales will bottom out in 2016. However, the PC market in Western Europe remains difficult following the Brexit vote. "Device vendors are mitigating the currency depreciation of the pound in two ways — first, they are taking advantage of the likelihood of a single-digit decline in PC component costs in 2016," said Mr. Atwal. "Second, they will "de-feature" their PCs to keep prices down. With these changes, Gartner expects PC prices in the UK to increase by less than 10% in 2017." 

For the PC market to stay on pace for flat growth in 2017, business spending needs to flourish. "The inventory of Windows 8 PCs should have been cleared, and large businesses in mature markets are now looking to move to Windows 10 through 2018," added Mr. Atwal. "In addition, more affordable hardware and increasingly available virtual reality content (such as games, stories and other entertainment) will enable consumer PC buyers to upgrade in order to experience immersive offerings. 

Smartphone Growth to Continue Slowing Down in 2016 

Total mobile phone shipments are on pace to decline 1.6% in 2016. The smartphone segment continues to grow, albeit more slowly than in previous years, and is expected to reach 1.5 billion units in 2016. "This is no surprise; the smartphone market is maturing, and reaching global saturation with phones that are increasingly capable and remain good enough for longer," said Roberta Cozza, research director at Gartner. 

In 2016, the Android market will continue to be bolstered by Chinese vendors offering more affordable premium devices. Despite the availability of the iPhone 7, Gartner expects a weaker year-over-year volume performance from Apple in 2016, as volumes stabilize after a very strong 2015. As a result, Gartner expects total smartphone market to only increase 4.5% with premium smartphones declining 1.1% in 2016. 

"We expect the market for premium smartphones to return to 3.5% growth in 2017, as stronger replacement cycles kick in and in anticipation of a new iPhone next year, which is expected to offer a new design and new features that are attractive enough to convince more replacement buyers," said Ms. Cozza.

About Gartner 

Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. The company delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the valuable partner to clients in approximately 10,000 distinct enterprises worldwide. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, USA, and has 8,100 associates, including more than 1,700 research analysts and consultants, and clients in more than 90 countries.