Because of softening demand in China, the world's biggest mobile phone market, CCS Insight has slightly lowered its forecast in the latest update. Jasdeep Badyal, CCS Insight's Analyst for Smart Devices commented, "Growth has stalled as most Chinese consumers have now made the transition to smartphones. Future sales are now dependent on replacement purchases, as is the case in other mature markets around the world".
On a more positive note for the industry, CCS Insight forecasts a huge rise in 4G adoption. It predicts 770 million 4G handsets will be sold in 2015, up 75% on 2014, with China making up more than a third of the volume. Badyal notes, "Despite the overall decline in Chinese sales, the country's mobile network operators have built up their 4G networks in record time. The result is that two out of every three phones sold in China in 2015 will support 4G."
As ever, all eyes are on Apple, by far and away the most profitable smartphone maker at present, which has consistently delivered year-on-year growth. However, with market growth in China depleted, most of the big increases in mobile phone sales are being fuelled by inexpensive Android smartphones in emerging markets, where the majority of people cannot afford Apple's products.
On this basis CCS Insight believes it is an astute move by Apple to offer its new installment plans in markets such as the US. Badyal notes, "Apple is banking on its instalment plans stimulating early and predictable replacement sales among the most loyal US iPhone owners, and we predict it will take a similar approach in other key markets. This will help Apple maintain its current global market share for at least the next two years."
Beyond Apple, life is tougher than ever for phone-makers as competitive pressures continue to mount in the smartphone market. Samsung remains the world's biggest phone-maker by volume, but the companies to watch are Chinese manufacturers such as Huawei, Lenovo and Xiaomi, which together accounted for 21% of the 550 million Android smartphones sold worldwide in the first half of 2015.
The success of these players was built mostly in their home market, but as growth opportunities fade, they are having to look beyond China to markets such as India for the next wave of expansion. Badyal observes "Chinese companies have been targeting overseas growth for some time, but now their home market is maturing, we expect them to pile even greater pressure on competitors as they seek new opportunities elsewhere".
CCS Insight believes it is inevitable there will be casualties among Android smartphone brands as manufacturers find it hard to differentiate on almost anything other than price. Although Apple's average selling price rose 14% in the first half of 2015, to $659, CCS Insight expects the average manufacturer price of Android handsets will fall by 8% this year to $164.
The dominance of Android and iOS means there is little opportunity for devices powered by other operating systems. Windows, which is currently a distant third in terms of smartphone market share, is struggling to remain relevant in consumer smartphones. The only glimmer of hope lies with business users, who will help Microsoft's operating system retain a market share of 4% on mobile phones in 2017. As Microsoft unites its PC and phone platforms under the Windows 10 banner, it will take cold comfort from such a meagre slice of the pie.