CCS Insight: phone market has officially plateaued

For years, we’ve been looking at stagnating growth in the mobile phone industry, and analysts with sandwich boards have been prophesying the inevitable flattening of the curve for quite some time. Now, according to CCS Insight, that time has finally arrived.

Researchers report that in spite of there being some growth in regions like China, global 2016 shipments of mobile devices will fall 1.3 percent from last year’s shipments. About 2 billion devices are now expected to shipped every year between now and 2020. The number of phones shipped annually had previously been steadily increasing, but now it seems like we’ve finally arrived at the cap: the world only needs about 2 billion new mobile devices per year.

This turns what was previously a flourishing market into an increased zero-sum game atmosphere. There don’t appear to be any new markets to colonize, so big players will be fighting over those 2 billion sales for the next half decade.

Analysts believe that this will be felt hardest by smaller manufacturers. The problem is compounded by a recent component price hike. Evidently, bigger companies like Samsung and HUAWEI have been buying them in bulk, and the recent earthquakes in Taiwan have thrown a wrench into production. Increased prices of components mean that companies who don’t move vast numbers of mobile phones will struggle to show profit.

CCS Insight’s Director of Forecasting Marina Koytcheva reports:

This is the first time we have seen component price rises for years. Phone makers with low volumes will find it almost impossible to turn a profit in these conditions without raising the prices of their products. It’s a great opportunity for the big players like HUAWEI and Samsung to exploit their scale, apply pricing pressure and strengthen their leading positions.

CCS Insight says that their research does take into consideration the rise of 5G networks, which are expected to emerge commercially in the 2018-2020 timeline. They believe that sales of devices compliant with 3GPP Release 15 won’t reach measurable volumes until 2020. At that time, they will “represent the growth story for the next decade” for the mobile market.

What do you think of CCS Insight’s report that the mobile phone market has peaked? How will this achieved ceiling affect the smartphone market at large? Let us know your take in the comments below!