Mobile Phone Demand in Detail: Uncounted, New and Replacement Sales

Strategy Briefing

About This Report

Dec 2014

Smartphones have emerged to become the biggest volume and value sales driver within consumer electronics. However, volume sales have started to slow down as the pool of first time buyers across many of the largest emerging markets has become smaller. Nevertheless, there is still significant latent demand that can be unlocked by driving down replacement cycles and minimising the impact of the second-hand market.

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Mobile Phone Demand in Detail: Uncounted, New and Replacement Sales

Smartphones to remain the biggest sales driver in consumer electronics

Despite slowing volume sales growth and declining prices, smartphones will remain the largest driver of both volume and value sales in consumer electronics over the forecast period.

The pool of first-time mobile phone buyers is nearly depleted

The global mobile communications market is near saturation, with limited potential for significant further subscriber growth. This means that sales of mobile phones to new users will be minimal over 2015-2018.

The number of feature phone users will continue to decline rapidly

With the switchover from smartphones to feature phones nearly complete in China by the end of 2014, the number of feature phone users globally has declined dramatically, and will fall further as India and other emerging markets follow suit, with similar implications for the mobile phone market to those observed in China over 2010-2014.

The replacement cycle is emerging as the most important demand driver

With volume sales almost entirely dependent on replacement purchases, shortening the replacement cycle has become the biggest opportunity to increase volume sales. However, doing so in an increasingly competitive environment will be difficult.

Reducing the number of used and black market phones in the market can spur significant growth in demand

There is a significant difference between the number of mobile subscriptions and the number of phones in use acquired through standard channels. Reducing the proportion of used and black market phones on the market would stimulate demand for new units.

A significant qualitative shift expected in the market over the review period

An ever increasing proportion of users globally will be buying their second, third and subsequent smartphones over the forecast period. This, combined with rising usage of mobile internet, will drive a growing number of consumers to switch to higher quality devices.


Key findings

Mobile Phone Market Overview

Smartphones to remain key driving force in consumer electronics
Smartphones become the centre of the digital consumer
Smartphone growth driven by Asia Pacific
Windows gaining traction with highest growth

First-Time Mobile Phone Buyers

Feature phone users
Phone-less population nearly depleted
Asia Pacific to continue driving subscriber growth.
India and other emerging markets likely to follow in China’s path
Effect of growing subscriber base on mobile phones in China
Calculating the impact of subscription growth on volume sales

Replacement Trends

Replacement cycle emerges as the most important demand driver
Effects of replacement cycle movement on demand
Replacement cycles declining in emerging markets
Factoring in modularity and increased reparability
Aggregate replacement cycles see minimal decline

Dissecting Volume Demand

Phone lines versus phones in use
Replacement and new demand
Mobile phone market potential far from exhaustion
Smartphones to be key part of replacement purchases

Report Definitions

Data parameters and report definitions