Smartphone sales growth predicted to slide

Smartphone shipment growth in China will plummet by more than half to 7.8 percent next year, the first single-digit level since 2009, an industry report has warned. DONG JINLIN/CHINA DAILY

Smartphone shipment growth in China will plummet by more than half to 7.8 percent next year, the first single-digit level since 2009, an industry report has warned.

A declining base of first-time buyers will be the major reason, and future sales will be driven by the replacement market, research firm International Data Corp said.

This year's estimated growth rate is 19.9 percent, the report said, with 420 million units likely to be shipped.

James Yan, a senior researcher at IDC, said that carriers' heavy subsidies for smartphones have driven demand in recent years, but as the penetration rate nears a saturation point, a slowdown becomes inevitable.

The expansion of fourth-generation telecom services and online sales will drive next year's smartphone market.

"With an increasing number of vendors ready to launch handsets with 4G capabilities in 2015, the next-generation telecom technology will contribute the majority of sales," Yan said.

IDC estimates that Chinese customers will buy 330 million 4G smartphones next year, more than 70 percent of total shipments.

Xu Hao, an analyst at local consultancy Analysys International, said that 4G-capable handsets will become the new market favorite in 2015 because almost every Chinese vendor is introducing affordable 4G gadgets.

4G-enabled models with a 1,000 yuan ($160) price tag "are set to push sales, although the overall demand increase will slow", Xu said.

The IDC report said that the hottest competition in the 4G sector will be around the 2,000 yuan price point as major vendors release products by mid-2015.

E-commerce will become an emerging sales channel for smartphones. About 20 percent of the purchases will come from online orders by 2015, according to IDC.

Xiaomi Corp, Lenovo Group Ltd and Huawei Technologies Co Ltd have opened Internet stores this year.

Xiaomi, the biggest local vendor by shipments, depends heavily on online sales. During this year's Nov 11 Singles' Day online shopping promotion, the Beijing-based company sold a record 1.16 million smartphones. Company executives described online sales as the most trusted and efficient revenue booster after the event.

Despite the slowing growth, IDC said China will continue to lead the global smartphone market in total shipments. The Chinese market is nearly three times bigger than the runner-up, the United States, in terms of shipments, it said.

For local handset makers, the future lies in markets outside China, analysts said.

Leading Chinese vendors have extended their reach overseas, and their exports to other Asia-Pacific markets saw a marked increase in the past few quarters, IDC said in a separate report.

Chinese brands such as Xiaomi, Lenovo and Huawei are expected to devote more attention to exploring destinations in emerging overseas markets, it said.