Report: Smart Phone Market Stabilizes for Next Four Years as Windows Phone Limps Along

Posted on December 4, 2015 by Paul Thurrott in Android, iOS, Mobile, Windows Phones with 0

Report: Smart Phone Market Stabilizes for Next Four Years as Windows Phone Limps Along

To see the future of smart phones, just take a look at the market today, which is dominated by Android, with over 81 percent of sales, followed by iPhone (15.8 percent) and Windows phones (2.2 percent). Why? Because not much is changing in the next four years, IDC says. And that’s bad news for Windows phone fans.

Actually, there’s worse news. In the short term—this year and 2016—sales of Windows phones will actually fall, and dramatically, IDC says. It’s not clear how or why things change, but by 2019, IDC believes Windows phone sales will once again reach the rarefied air of 2015 and once again eek above 2 percent share.

Yep, that what Windows phone looks like.

“Despite all the effort Microsoft has put into the launch of Windows 10, IDC does not expect Microsoft’s share of the smartphone OS market to grow much over the coming years,” a new IDC research report notes. “IDC is forecasting a year-over-year decline of -10.2% in 2015, followed by further decline in 2016. The weak results can largely be attributed to the lack of OEM partner support.”

Not helping matters is that the average selling price of Windows phones fell dramatically during the 2014 push to grow the platform with low-end phones. That didn’t work because the rest of the market continued to grow at a faster pace. And amazingly, Android—which, by the way, is free—not only continued its stranglehold on the market but actually grew its average selling price.

“In 2015, IDC expects the average selling price (ASP) of Windows Phones to be $148, which is $71 lower than Android’s ASP of $219,” IDC continues. “This was brought about by the Microsoft/Nokia push into the low-end mass market. This approach helped drive shipments up to 34.9 million units in 2014.”

But Windows phone shipments in 2015 are expected to hit 31.3 million, a decline of 2015. And while someone grasping at straws may point to the recent Lumia 950 and 950 XL flagship releases as evidence that Microsoft is trying to raise ASP, that can’t work because of the (planned) limited distribution of those devices.

By 2019, Windows phone unit sales will allegedly hit 43.6 million units, up from 31.3 million this year. But market share growth is statistically zero, with Windows phone “growing” from 2.2 percent of the market in 2015 to 2.3 percent in 2019.

Is there any good news for Windows phone? No. But you might argue that Windows phone is at least outperforming the “others” smart phone category, which includes Blackberry, and not that the word “Blackberry” doesn’t even appear once in IDC’s report. “Others” will account for just 0.8 percent of the market in 2015, less than half of Windows phone’s share. But if we’re slicing up such tiny numbers, let’s not ignore 2019, when “others” are expected to account for more than half of Windows phones’s share.

More interesting, perhaps, is that the volume part of the market isn’t really changing over the next four years. If this holds, that means you can accurately make a good technology bet today, though of course those in the U.S. will want to talk a look at country-specific predictions since iPhone usage is so high (and approaching 50 percent) here in this market.

But for the wider world, what is today will be tomorrow. For the most part.

That is, in 2015, IDC says that Android will dominate the smart phone market with 81.2 percent of sales. Of the 1.43 billion smart phones sold this year, fully 1.16 billion will be Android-based. By 2019, things don’t change much: Android increases its share of the market to 82.6 percent and hits over 1.5 billion units sold of a total market of 1.86 billion.

As for the iPhone, Apple’s platform will account for 15.8 percent of the market in 2015, with 226 million units sold, according to IDC. By 2019, Apple’s share goes down a bit to 14.1 percent, but it will sell 263 million units. So where Android gains a little bit, iPhone loses a little bit. Nothing major.

IDC’s big takeway from this report is that smart phone growth will slow to under 10 percent in 2015, for the first time. I’m not surprised by single digit growth, since the China market is now saturated and we’re looking at a market defined mostly by replacement devices going forward. That’s why Apple introduced its iPhone Upgrade Program this year in the U.S., and why the firm will introduce it over time to the world in 2016 and beyond.

Look, IDC is notoriously terrible with its predictions. But they don’t need to accurate, and while Gartner’s numbers will be a bit different, the broad strokes will always tell the same story. It’s over, folks.