iPhone shipments to fall in 2016, while Android makes gains

Decline in two-year contracts may also cause general smartphone market contraction, analysts claim

Smartphones pile

IDC has predicted the worldwide smartphone market will start to slow in 2016 as consumers start shying away from two-year contracts in favour of monthly installment plans that do not lock them in.

The research firm also predicts that, for the first time ever, iPhone shipments will decrease compared to 2015,dropping from 232 million units shipped in 2015 to 227 million in 2016. However, the company thinks Apple can bounce back in 2017 thanks to the lower-cost iPhone SE and offers an attractive early trade-in programme.

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Android shipments, however, are set to increase year-on-year, rising from a predicted 1.24 billion shipments in 2016 to 1.57 billion in 2020, thanks to OEMs offering a wider variety of devices at different price points and integrating unique UIs to attract a bigger audience.

"Vendors continue to push larger screened devices at a variety of price points that feature big bold displays as well as powerful multimedia capabilities in both mature and developed markets,"Anthony Scarsella, research manager with IDC's Mobile Phones team said.

"We are witnessing a plethora of vendors shifting their flagship devices towards the Phablet category as the average selling price for a Phablet will remain significantly higher than a regular smartphone ($383 vs. $260 in 2016) through the forecast period."

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The way people buy their devices is also changing. For example, some markets are moving away from two-year subsidised contracts towards handsets payable by monthly installments or selling and buying them via online marketplaces.

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"Consumers everywhere are getting savvy about how and where they buy their smartphones, and this is opening up new doors for OEMs and causing some traditional channels to lose some control of the hardware flow," said Ryan Reith, program vice president with IDC's Worldwide Quarterly Mobile Phone Tracker.

"Smartphones sold into eTailer channels grew 65 per cent in 2015 and are expected to account for roughly 12 per cent of smartphone shipments in 2016, up from just 4 per cent in 2013. Consumers are having more say over which brands they want and at the same time able to bargain shop."

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