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Phones

Smartphone sales growth expected to stink this year

Sales may grow only 7 percent in 2016, says research firm Gartner, down from 14 percent last year.

Smartphones are no longer flying off the shelves.

CNET

Consumers are just saying no to new smartphones.

Global smartphone sales will no longer hit double-digit growth, market researcher Gartner said Tuesday, while predicting a rise in sales of 7 percent for 2016. That compares with 14.4 percent annual growth in 2015 and the peak of 73 percent in 2010.

In terms of numbers, smartphone unit sales are predicted to hit 1.5 billion this year and inch up to 1.9 billion in 2020.

The market is suffering from a malady dubbed phone fatigue. Consumers are less willing to spend money on new phones due to a lack of sexy, must-have features. At the same time, mobile carriers have been killing off subsidized plans, forcing consumers to buy phones at full retail price and prompting them to hang on to their existing devices longer than in the past.

The wireless carriers and certain vendors such as Apple now push financing programs that offer people a new phone after just a year. However, those programs aren't catching on with all buyers.

"These programs are not for everyone, as most users are happy to hold onto their phone for two years or longer than before," Gartner research director Roberta Cozza said in a statement. "They do so especially as the technology updates have become incremental rather than exponential."

Smartphone ownership has reached a saturation point in major markets such as the US, Europe and Japan, leaving fewer new buyers. In mature markets, owners are keeping their smartphones for around 2.5 years, Gartner said. In emerging markets, people are keeping higher-end phones for 2.2 years to 2.5 years and basic phones for at least three years.

Given the saturation in mature markets, the industry has begun to focus on regions such as India where 139 million smartphones are expected to be sold this year. But high-priced phones are out of reach of most Indian consumers; the average selling price of a mobile phone in India is under $70.

China had been another country with healthy opportunities for smartphone vendors, but it has reached a saturation point and is expected to remain stuck over the next five years, according to Gartner.