Author(s): Marina Koytcheva
CCS Insight's latest update to its worldwide forecast of mobile phone shipments was unveiled today. Here is a short summary of our findings.
The mobile phone continues to power one of the most vibrant sectors of the consumer electronics market. We forecast that 2 billion mobile phones will be shipped in 2017, a 2 percent rise from 2016. Global demand is expected to continue at this rate for the next five years, resulting in a staggering 10 billion mobile phones being sold during that period.
Smartphones continue to account for most sales, with an expected 1.53 billion shipped in 2017, up 5.4 percent from 2016. This figure will rise to 1.90 billion in 2021, when smartphones will make up 92 percent of the total mobile phone market.
Although total shipment volumes will remain largely flat over the next five years, the technology landscape is changing rapidly.
The forecast reveals the strong progress that LTE technology has made in mobile phones over the past decade. We recorded the first shipments of LTE phones in 2011, when they accounted for just 0.2 percent of the total market. We expect 68 percent of phones shipped in 2017 to be LTE-capable, climbing to 84 percent in 2020.
But 4G technology isn't limited to smartphones. Spurred by the recent introduction of Qualcomm's low-cost LTE chipset for feature phones, the technology will find its way onto more and more affordable phones. This will be particularly important in markets such as India, which offer the best growth opportunities in the coming years.
There's also growing potential for 5G-capable handsets, despite the fact that early deployment of 5G networks will focus on providing fixed wireless connections. We project that 100 million 5G-capable phones will be shipped in 2021; leading the charge will be North America and developed markets in Asia-Pacific such as Japan and South Korea.
Furthermore, our forecast identified several regional trends. Mature markets such as North America and Western Europe will see no growth over the next five years. China will remain the largest global market, with sales reaching half a billion units in 2021. Growth in the Chinese market has been sustained longer than previously expected, mostly because people continue to upgrade to 4G-capable handsets. The main growth markets during the forecast period will be in Africa, India and some other markets in South-East Asia.
India is a particularly important market, with a compound annual growth rate of 4 percent between 2016 and 2021 — significantly higher than the 1.3 percent worldwide average. We expect an interesting battle to emerge in India as rival phone makers compete to take advantage of this growth. Chinese smartphone manufacturers have clearly set their sights on increasing their share of the market, but the Indian government is determined to support local manufacturing efforts with its Make in India initiative.
However, we caution that despite the impressive sales volumes, market conditions remain tough for phone manufacturers. Mobile phone makers, especially the smaller ones, remain under tremendous pressure as component prices — particularly memory — continue to rise and margins keep getting tighter. It's more apparent than ever that success in mobile phones requires immense scale; as we predicted, smaller players are being squeezed harder than ever. Without the benefits of a large-scale business, the only way to survive is by identifying a niche that's underserved by the big players.
Our global mobile phone forecast provides a five-year outlook, including the current year, of shipments and market value of smartphones and non-smartphones. More details of CCS Insight's comprehensive Mobile Phones research service can be found here.