After a decade of incredible growth, 2016 will go down in history as the year the smartphone market stopped growing.
Smartphone sales dropped 2% in major global markets last year according to a new report from Kantar Worldpanel ComTech. The declines come as the industry matures, consumers show reluctance to change brands and ecosystems, and vendors focus their efforts on selling more upgrades and replacing existing devices rather than connecting with larger numbers of new buyers.
Finding success in the new smartphone economy will require a fundamental change in the tactics used by vendors to market devices and services. Early upgrade programs have become more common among carriers in recent years, but they have failed to show a significant impact on customer behavior.
Pulling consumers further into a vendor’s ecosystem is a proven way could stimulate growth. Loyalty among iPhone owners in the US was 92% in 2016. For those who also owned an iPad, that number jumped to 96%. A similar pattern is seen among Samsung smartphone owners. Their loyalty to the phone alone ranked at 67% and jumped to 74% among those who also owned a Samsung tablet.
Wearables were expected to be the next big mobile technology, promising to expand the smartphone ecosystem to the wrist. However, judging from disappointing sales results, vendors were far more excited by the potential than were consumers.
Virtual Reality, Augmented Reality & AI
The latest in cutting edge technology could stimulate future growth, but without more compelling applications for these technologies they may end up being little more than hype. The market will need to prove a satisfying combination of technology, content, and services that make consumers’ lives easier.
For companies in the mobile space, the days of business as usual are gone. If mobile manufacturers want to preserve the global brands they’ve worked so hard to build, they must blaze new trains, innovate new offerings, and nurture new partnerships. Those that fail can be assured their rivals will step up to the challenge.
Source: Kantar Worldpanel