Mobile device market down 8% to $392b – what’s the next big thing?

The mobile device market is one of the largest in the IT industry. In the second quarter spending worldwide fell by 8% to $86.6b (as it did in the year to June – to $392b); unit shipments were down by 3% to 354m in the quarter and by 5% to 1.519b. The installed base stood at 3.5b at the end of June – 4% down on the previous year. Despite these falls, it’s staggering to think that this business is shipping computerised devices to the equivalent of a quarter of the world’s population on average, even there remain areas of the world in which penetration is relatively low.Apple leads the market in terms of revenues, with a 39.2% of the year’s spending and Samsung in terms of unit shipments, with a 22.3% share. They took first and second places in both shipments and revenue and are followed by a number of large – mainly Chinese -suppliers, such as BBK which manufacture the OnePlus, Oppo and Vivo brands.

Smart phones dominate in terms of form factor, accounting for 77.5% of the spending on all mobile devices. Smart tablets (I use the term to differentiate these ARM-based products from PC Tablets which use x86 chips) were the next biggest – taking an 11.9% share, while smart wearables from suppliers such as FitBit and Apple took a 4.3% share. Basic phones (those lacking advanced operating systems and graphical features) took just 6.2% of spending, although they took 18.4% of unit shipments in the year.

Despite successive introductions of new form factors (i.e. tablets, smart watches and the like) the ‘smart’ market is in slow decline in both revenues and shipments; like basic phones in 2007-2011 the smart phone business has become a victim of its own success, with annual shipments failing once they began to  exceed one billion per year in 2015. It’s not yet possible to see what the next great mobile device type will be; it certainly won’t be audio devices, smart tablets, or even smart wearables, as they’re trajectory demonstrates (see my Figure above).

A decade ago analysts would argue over which operating system – out of Android and Apple’s iOS – would win over time. Looking back now (see my Figure above) we can see overall Android won (just) in terms of annual spending. Nevertheless Apple’s iOS has kept pace in second position – an astonishing task for a single-supplier product. In unit shipment terms the gap is wider of course with Android accounting for 58.3% of shipments compared with iOS’s 19.3%. This demonstrates that, some 12 years after launching its first phone, Apple is still pursuing a high-end strategy. As it launches its own on-demand TV channel, it will be interesting to see the extent to which it can integrate this with its massively successful device business.
Asia Pacific has always been the strongest regional market for mobile devices and its lead over the Americas and EMEA has got stronger in the last few years (my Figure above shows annualised shipments on a quarterly basis by region). This is due mainly to the recent penetration of large country markets such as India and China.

The mobile device market is an essential part of the digitization of the modern world; it allows users to maintain sophisticated access to social and business applications and has extended the reach of technology tremendously. However it has also created new digital risks as personal and private data is being exploited by political parties, governments and criminals. While privacy acts such as the EU’s GDPR have helped to identify the misuse of personal data, exploitation is continuing. I predict that the next great mobile device type will help users maintain the privacy of their interactions and personal data more effectively than before.

Of course you should contact us if you’d like to know more about this market, such as shipment and spending levels in your own country or region.

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