The worldwide smartphone market is expected to hit a year-over-year growth rate of just 1.6 percent in 2016, with a total of 1.46 billion units shipped, according to new figures from International Data Corporation (IDC).
That figure marks a steep slide from 10.4 percent growth in 2015, and both developed and emerging markets are only expected to experience a compound annual growth rate of 5.4 percent through 2020 to reach 1.76 billion units shipped, IDC said.
So what could help a smartphone market that is increasingly dependent on handset upgrades rather than new user growth? Virtual and augmented reality.
“From a technological standpoint, smartphone innovation seems to be in a lull as consumers are becoming increasingly comfortable with ‘good enough’ smartphones,” said IDC senior research analyst Jitesh Ubrani. “However, with the launch of trade-in or buy-back programs from top vendors and telcos, the industry is aiming to spur early replacements and shorten lifecycles. Upcoming innovations in augmented and virtual reality (AR/VR) should also help stimulate upgrades in the next 12 to 18 months.”
IDC said the rise of VR and AR technologies will also drive the continued adoption of phablets, or smartphones with screens 5.5 inches or larger. IDC said phablets are expected to go from one quarter of the smartphone market in 2016 to one third of the market by 2020.
IDC Mobile Phones research manager Anthony Scarsella said the firm anticipates the launch of many new “flagship type” phablets from “both aspiring and traditional vendors.”
Average selling prices for both phablets and regular-sized smartphones are both expected to drop by 2020, Scarsella said, with phablet prices dropping 27 percent to $304 and regular prices dropping 12 percent to $232.