Since smartphones have been around, people have been buying them. Lots of them—the market has grown exponentially over the past decade. But now, for the first time, market research firm IDC is predicting that 2015 will be the first year that the rate at which the worldwide smartphone market expands will sink into single digits. Turns out, most people who want smartphones probably already have ’em. Counterintuitively, this is to Apple’s benefit.
IDC’s new report today predicts total smartphone shipments in 2015 will amount to a 9.8 percent increase compared to last year, or 1.43 billion units. According to the firm, growth has slowed in the Asia Pacific region, Latin America, and Western Europe.
Not surprisingly, IDC expects that Windows Phones and other phones running on operating systems other than Android or iOS will ship in significantly less quantities in the future.
But a much more pointed reason for slowing growth is the changing market dynamics in China. As the world’s largest smartphone market, representing about one-third of total smartphone sales globally, China has the scale to shift global trends. And in China, the smartphone market is saturated, which means growth has stagnated. First-time buyers have vanished, meaning the growth potential in the country is now in the upgrade market.
“In past years, feature phone users were converting to first-time smartphone buyers,” Anthony Scarsella, a research manager with IDC’s mobile phones team, tells WIRED. “That’s shifting out of China right now.”
Now that conversion has moved to other regions. The Middle East and Africa have seen the most growth in 2015, with shipments increasing nearly 50 percent year over year. That’s even greater than “hot growth” markets like India and Indonesia.
To maintain momentum, low-cost smartphones will have to continue to be a hit in less mature markets, Scarsella says. In more developed markets, smartphone makers may be motivated to push device financing and trade-in options to entice consumers, similar to what Apple is already doing with its iPhone Upgrade Program in the US.
All of which seems to point to Apple being the clear winner here. Since most people who want smartphones in many parts of the world now already own them, it follows that more growth is likely to happen in the upgrade market than among first-time buyers in China. In its last reported quarter, Apple saw 99 percent revenue growth in the country compared to the same period last year. There’s yet more potential to convert smartphone owners into Apple users as the country continues its transition to 4G technology. Finally, it’s because Apple is the undisputed king of premium smartphones that, even if the company doesn’t sell all the phones, it still makes massive piles of money.
So yes, while smartphone shipments have slowed, many of the bigger makers, especially Apple, don’t have reason to panic. It’s the little guys who are on the losing end.