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Emerging markets fuel smartphone sales

News, 23 August 2016

NUREMBERG: Demand in China and emerging markets has driven up global smartphone sales in the second quarter of the year, a new industry report has found.

German research firm GfK said there was year-on-year sales growth of 6.9% in Q2 2016, or 330.1m units sold, and that China witnessed growth of 24% to 109.7m units.

This prompted GfK to revise its forecast for the value of global smartphone sales in 2016 from $400.7bn to $426bn, a 5.1% increase from the previous year.

GfK's report also noted that another cause for its revised forecast was strong sales of mid- to high-end smartphones that has reversed a previous trend of share gains by those costing less than $100.

"Volume growth is coming from many emerging markets, especially a resurgent China, but also Emerging Asia and Africa," said Kevin Walsh, GfK's director of trends and forecasting.

"We need to look beyond sales in the major cities and the shipments of global manufacturers to reveal this strong growth – since it is consumers in rural areas driving this demand," he added.

Reinforcing his observation about demand outside the major cities, the report found continued operator subsidies in China helped to drive strong 4G smartphone adoption in the country's smaller cities. As a result, Chinese brands saw their market share increase from 74% in Q2 2015 to 81% in Q2 2016.

Turning to other regions, GfK said Russia was a key driver of growth in Central and Eastern Europe where smartphone demand hit 16.8m units in the second quarter.

The region saw 12% growth in Q2 and GfK forecasts that smartphone demand there will increase to 77m units in 2016, a year-on-year increase of 8%.

Meanwhile, smartphone unit sales totalled 30m in Western Europe in Q2 2016, a modest year-on-year fall of 1%, but sales declined a full 11% in Spain because the country's three leading operators raised their tariff prices by an average of €30.

GfK also noted that the UK's decision to leave the European Union has had "no immediate impact" on UK smartphone sales.

Elsewhere, smartphone sales in North America totalled 42m units in Q2 2016, down 5% quarter-on-quarter and 6% year-on-year. Sales also fell in Australia where 17m units were sold, down 12% since Q1 2016 and 1% year-on-year.

Data sourced from GfK; additional content by Warc staff