Worldwide Smartphone Sales To Slow In 2016

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What happens when every person on the planet has a cell phone (or two)? Sales are going to decline. What phone are you using right now? How often do you upgrade?

Gartner, Inc. said global smartphone sales will continue to slow and will no longer grow in double digits. Worldwide smartphone sales are expected to grow 7 percent in 2016 to reach 1.5 billion units. This is down from 14.4 percent growth in 2015. In 2020, smartphone sales are on pace to total 1.9 billion units. "The smartphone market will no longer grow at the levels it has reached over the last seven years," said Roberta Cozza, research director at Gartner. "Smartphone sales recorded their highest growth in 2010, reaching 73 percent."
 

mullet

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Well it seem the world is running out of smart people.
 

westrock2000

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What, did anyone expect 73% growth year on year to be sustainable?

The smart phone was a revolutionary product. There is no denying that. I mean it will probably go down in history on par with paper, cars and personal computers. Naturally everyone wanted one and it was economical enough that it was accessible to most people. The life cycle was unprecedented. A 12 month life cycle, historically speaking, is just unheard of. The hurricane has passed. It changed the landscape and now we move forward forever affected. But to think that it would sustain like it was in the beginning would have been foolish.
 

John721

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Currently using a ZTE Zmax2 (Android 5.1, 5.5" screen) I got off a cheap slickdeals thread. Works well and probably going to stick with it for several years or until it fails.
 

Zarathustra[H]

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This is always what happens when you reach market saturation. The market itself ceases to grow as a measure of volume alone, so you have to start being more creative on how you can provide more value, and get the existing customer base to either spend more or upgrade more frequently if you want to grow the market, or just try harder to beat the crap out of your competitors to grow market share that way.

Personally, I am currently using a Nexus 5x. I can't imagine using a non-Nexus phone where things currently stand, and I am not about to get one of those gargantuan phones, so, if I upgrade it will likely be to the next 5" class Nexus phone. (hoping it is not Huawei, as I don't want to buy a Chinese spy-phone.)
 

nvgrim

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Next step will to build them with even cheaper quality so they break more often and keeps the new phone business still afloat.
 

westrock2000

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This is always what happens when you reach market saturation. The market itself ceases to grow as a measure of volume alone, so you have to start being more creative on how you can provide more value, and get the existing customer base to either spend more or upgrade more frequently if you want to grow the market, or just try harder to beat the crap out of your competitors to grow market share that way.

Personally, I am currently using a Nexus 5x. I can't imagine using a non-Nexus phone where things currently stand, and I am not about to get one of those gargantuan phones, so, if I upgrade it will likely be to the next 5" class Nexus phone. (hoping it is not Huawei, as I don't want to buy a Chinese spy-phone.)
You actually bring up another problem. The pathway for cellphone upgrades had already been layed out by decades of computer and laptop advancements. Faster processing, more storage, more memory, better screens. The methodology was already in place, so all they had to do was physically create it. But now, the feature sets have plateaued. It's either that the feature is no longer enticing to the customer (like a bigger screen in your scenario) or the technology doesn't exist for something (like smaller process technology). So much like the computer industry is seeing, there isn't much of a reason for people upgrade, other then for the sake of consumerism.....which economically the world is not a good position to support right now.
 

arnemetis

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I'm still using my galaxy s4 from three years ago. I've picked up an lg g4 back during the November super deal @ Verizon for free, but haven't gotten around to actually using it as my daily driver. S4 still works, even if the battery isn't so good now. With rooting getting harder and harder, and things like removable battery and expandable storage vanishing (although these are starting to come back?) I don't know why people would upgrade regularly unless their device is damaged or it's a fashion statement.
 

Domingo

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Dating back to the first iPhone, roughly every 12-18 months there would be a significant new hardware addition to make users want to upgrade.
That hasn't been the case in a while. You can only open an app so fast. Does an additional 1 or 2 megapixel camera really matter?
If you look at the new Samsung phones, they made selling points out of bringing removed features (waterproofing and memory cards) back.

I'm on a Moto X Pure and I'll probably keep rocking it as long as they keep updating it. Without any bloatware and a ton of capacity it's pretty ideal for me. It'll take another paradigm shift (or lack of OS updates) to make me eager for an upgrade.
 

Gigus Fire

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What, did anyone expect 73% growth year on year to be sustainable?

The smart phone was a revolutionary product. There is no denying that. I mean it will probably go down in history on par with paper, cars and personal computers. Naturally everyone wanted one and it was economical enough that it was accessible to most people. The life cycle was unprecedented. A 12 month life cycle, historically speaking, is just unheard of. The hurricane has passed. It changed the landscape and now we move forward forever affected. But to think that it would sustain like it was in the beginning would have been foolish.
I disagree. It's a miniaturization of an existing product, that being the personal computer and combining that with another existing product, that being the cell phone. It's a convenience, not a product that changes anything. It's less efficient to use than a computer to begin with because of the size reduction.

That being said, the innovations for cell phones have been done. They're just making small incremental changes each year. The same thing has gone on in the PC market for the past 5 years as well, it's just that the cell phone market has caught up. You can't go into growth mode the entire time, there has to be a sustain period until something worth while comes out. You don't see people going nuts buying tvs each year and even when they come out with something new (4k) analysts can be wrong and not predict the lack of interest.
 
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IC speed improvements are now linear instead of exponential. So you don't get a 2-3 year upgrade cycle driven by speed improvements anymore. Upgrading for a x2-4 speed increase was a no brainer back in the day, now it's 10-20% instead so if it ain't broke, don't fix it. They've pretty much run out of new things to jam into the smartphones to get up to buy them too.

I'm holding onto my Nexus 6 for a while longer as long as the battery holds up. I'd like my next phone to have USB type C (for fast charging), wireless charging (because I have the chargers and it's convenient for overnight), and be waterproof. Guessing the next Samsung G series may have all that, or maybe the next Nexus.
 
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I think pretty much everyone has one who wants one.

Who the hell runs out to buy a new smart phone every time a new one comes out? ;)
 

steakman1971

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I'm glad analysts get paid to make common sense observations. The 1st world smart phone boom economy ended about a year or two ago.
I work in the mobile app development field. One trend that I noticed this past year or so was that entrepreneurs are in shorter supply that I've ever seen them. 6-7 years ago, I used to get all of these people that "had a great, million dollar idea". I'm not seeing many of these people. I'm kind of glad as I wasted a lot of time listening to their speels and then asking them how they were going to get the data they wanted (which was usually not easy or copyrighted - lets not even talk about how a lot of them didn't have money and wanted some type of profit sharing deal...). There is still demand with companies - but I think this is another sign of the Gold Rush being over.
 
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First had a Samsung Galaxy Fascinate. That phone was absolute crap. So I got a Droid Razr. That phone was a tank and the only reason I switched it out was because it was on my ex-wife's plan. Now I have a Galaxy S5. I plan on keeping it for a very long time unless my charging issue continues. Aside from that, I have no real reason to upgrade. It runs everything that I want/need, screen is in good shape, and it is paid for.
 

bertkelmer

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Went from 4S to 6S, besides the screen, nothing changed, I don't use the fingerprint, apple pay, or 3D touch. So, I missed nothing in between these two phones. 3D touch would would be more useful if loading a message, website or app took forever (1G, 2G), so it would make sense to be like oh let me see a preview before I commit to waiting 2-3 minutes for this to load, if that. Companies are going to milk the "new features" as long as possible because tech junkies.
 

Ordeith

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Even the $30 Lumia 640 would meet the needs of many people. The sector just improved too quickly for its own good. :)
 

DocSavage

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Went from 4S to 6S, besides the screen, nothing changed, I don't use the fingerprint, apple pay, or 3D touch. So, I missed nothing in between these two phones. 3D touch would would be more useful if loading a message, website or app took forever (1G, 2G), so it would make sense to be like oh let me see a preview before I commit to waiting 2-3 minutes for this to load, if that. Companies are going to milk the "new features" as long as possible because tech junkies.
Why do you not use the fingerprint reader? Do you type in your password every time you use your phone, or do you just keep it unlocked?
 

bertkelmer

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Why do you not use the fingerprint reader? Do you type in your password every time you use your phone, or do you just keep it unlocked?
I keep it unlocked at this point in time. People tell me I should lock it. I guess if I did fingerprint would be better than punching in pass code.
 

nvgrim

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Why do you not use the fingerprint reader? Do you type in your password every time you use your phone, or do you just keep it unlocked?
i have never used the finger print reader, i think its pointless and id rather not have my fingerprint tied to my phone on some database.
 

Ryokurin

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Only reason I upgraded my old G3 to a S7 edge was because I wanted a fingerprint scanner. There just isn't a whole lot more they can do to them to make you want to upgrade. It's now a commodity product like PCs or cars. You aren't really itching to update unless your current is giving you problems or is no longer fitting your needs.
 

DocSavage

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i have never used the finger print reader, i think its pointless and id rather not have my fingerprint tied to my phone on some database.
It's not actually stored online. From: About Touch ID security on iPhone and iPad - Apple Support
Touch ID doesn't store any images of your fingerprint. It stores only a mathematical representation of your fingerprint. It isn't possible for someone to reverse engineer your actual fingerprint image from this mathematical representation. The chip in your device also includes an advanced security architecture called the Secure Enclave which was developed to protect passcode and fingerprint data. Fingerprint data is encrypted and protected with a key available only to the Secure Enclave. Fingerprint data is used only by the Secure Enclave to verify that your fingerprint matches the enrolled fingerprint data. The Secure Enclave is walled off from the rest of the chip and the rest of iOS. Therefore, iOS and other apps never access your fingerprint data, it's never stored on Apple servers, and it's never backed up to iCloud or anywhere else. Only Touch ID uses it, and it can't be used to match against other fingerprint databases.
 

Zarathustra[H]

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Only reason I upgraded my old G3 to a S7 edge was because I wanted a fingerprint scanner. There just isn't a whole lot more they can do to them to make you want to upgrade. It's now a commodity product like PCs or cars. You aren't really itching to update unless your current is giving you problems or is no longer fitting your needs.

Lol, I have a fingerprint scanner and refuse to use it after the court decisions that you can be compelled to unlock your phone if using biometrics but can not be compelled to provide your password (or pin).

Mostly agree though. That being said, as apps become more and more demanding, older arm chips start feeling slow, and the phones with non-replaceable batteries in them also have a slowly ticking self destruct timer, as eventual those Li-ion cells are going to have shorter life that you want.
 

Ryokurin

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Lol, I have a fingerprint scanner and refuse to use it after the court decisions that you can be compelled to unlock your phone if using biometrics but can not be compelled to provide your password (or pin).
Restart the phone as soon as you start to pull over. Pretty much all modern phones require your pin along with fingerprint to unlock after a restart. "Yeah, I can touch the sensor, but I don't remember the pin. I've been meaning to get someone to look into that"
 

csgill75

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My first "smart phone" was a Palm Treo. It has windows mobile. It was clunky but worked ok for what it was. From that I had a apple iPhone 3Gs a 4S and then went Android with the S4. I kept the S4 until it started loosing connection to the sim card and went to the Note 5. I'll probably keep it until something significant comes out. It's without a doubt the best phone I've ever used. I use Android Pay, fingerprint reader to unlock the phone, I actually use the stylus daily for quick notes at work and transfer them to OneNote. Quick charge at lunch and the battery lasts a day at work.
 

Zepher

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I used to upgrade every 20 months when my contract would allow it. this last time I upgraded after 30 months since I couldn't afford to upgrade at 20. Went from the iPhone 5S 16GB to an iPhone SE 64GB since it was a -$100 upgrade. $50 for the SE and I sold the iPhone 5S for $150.
 
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So does that mean we'll see better or worse deals on smartphones this fall? I'm really hoping to hold out for a phone upgrade until the Note 6 comes out. Also less bloatware, an unlocked bootloader, and more privacy focused phones would increase sales some.


Or I'm just saying it because that's what I want in a new phone. :)
 

memphist0

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I think it has less to do with market saturation and more to do with carriers not subsidizing phones anymore. Now people understand the true cost.
 

Ryokurin

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I think it has less to do with market saturation and more to do with carriers not subsidizing phones anymore. Now people understand the true cost.
Not really. Prices were lowered enough so that the phone payment is a wash from what people typically pay for service. And chances are if you are on a budget carrier your credit was bad enough that you had to pay a couple of hundred down to get a phone anyways. Understanding the true costs was just a convenient lie, similar to how cord cutting was being caused by the economy, while online accounts were increasing at the same time.
 

TheHig

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Still rocking my Lumia icon that I had to upgrade to Win phone 10 via Microsoft, thanks Verizon, and my Wife still has her Glaxy S 5. I get a solid discount through work with Verizon and the phones are paid for so we are running them to the fail point. Previous comments are spot one regarding saturation, hardware capabilities and enough feature enhancements to warrant upgrades are slowing down. Once you get over the fashion statement with the latest and greatest the phone reverts to the being the tool that it always was.

Cheers!
 

memphist0

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Not really. Prices were lowered enough so that the phone payment is a wash from what people typically pay for service. And chances are if you are on a budget carrier your credit was bad enough that you had to pay a couple of hundred down to get a phone anyways. Understanding the true costs was just a convenient lie, similar to how cord cutting was being caused by the economy, while online accounts were increasing at the same time.
You don't think people got sticker shock when seeing a Galaxy S7 for $650 after they had been used to maybe just $100 out of pocket (up front)? And their financing options are a joke. I just compared my old plan cost that had 2 subsidized phones to their new plans cost plus the cost of two new phones and it was almost $30 higher a month for the same level of service and credit score is excellent.

I think it has been a great trick by the carriers to unbundle their packages to make people think they are spending less.
 

Ryokurin

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I doubt they are looking at the price .

If you have good credit they are walking out paying nothing, so the free/penny phone people are happy. And if they are paying attention to the price the are worried more about the payment than the total amount, similar to car payments. If they did actually care the edge was $799 then they'll buy a cheaper phone instead and won't go without.
 

HoffY

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Good. Yearly release cycles with consumer electronics are stifling innovation.
I'd say more that the on-purpose absolute price gouging of the "new devices" and software bloating / development focus onto bullshit gimmicks instead of having a beautifully designed and full feature-set and UI with decent privacy and customer benefiting functionality is more whats stifling things.

I mean FFS, it now costs 1300AUD for a fucking smart phone 3.5 years after i bought the same level of smart phone for 720AUD and they contain less hardware as its even more integrated and the UI's and software are just full of fucking bullshit that either never gets used or only works half the time... or in a way that really only gives a benefit perhaps in a very rare circumstance yet gets massive amounts of marketing fluff and buzz words. All the while... limiting my options and customization ability.

argh. Tired. sorry if i am incoherent but hopefully something makes sense. Long painful day!
 

Comixbooks

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You wonder how bad the footprint is going to be for these things. Since they go out of style faster then a Sports car. I never owned one myself
 

HoffY

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I think it has less to do with market saturation and more to do with carriers not subsidizing phones anymore. Now people understand the true cost.
and you my friend.. are apart of the happy-to-be-fooled crowd. They make phones cheaper now then they ever have. Even with "new" tech and advancements. Economics of scale still apply and they are selling more phones then ever till this point. yet here we have a literal doubling of price for the same tear device. Its absolute highway robbery. Don't believe all the "BOM costs arent accurate.. what about R&D". Its all just BS. R&D is just an easy-out political term to fool the naive into spending more money so the middle men and CEO's and get even more over paid and the people that make the devices get paid even less to do more and more each iteration. I've worked in the design and manufacturing industry for just over 20 years... marketing departments are the last people you want to blindly believe.
 
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