IDC Shares Insights from the Mobile World Congress 2017

SINGAPORE, March 1^st, 2017 – As the mobile industry gathers this week at the Mobile World Congress in Barcelona talking about the latest and greatest in the smartphone industry, IDC thinks product maturity is not the only challenge the smartphone industry faces. Underlying a slowing down smartphone business, which had already been apparent before MWC 2017, the maturity of the urban market and conquering the rural divide remains as the big challenge to smartphone ownership.

“We are seeing that slowdown from urban saturation in India, while the rural markets are slow to make the switch from feature phones to smartphones”, said Kiranjeet Kaur, Research Manager, Client Devices, IDC Asia/Pacific. “It was the same story for many other emerging markets in Asia where the smartphone growth rate in 2016 was significantly lesser than that in 2015 in most countries in the region”.

This last year 2016 has also seen a plateauing in smartphone sales in Africa, while feature phone sales are proving resilient.

“The rapid growth of a couple of years ago has been replaced by flattening smartphone trendlines,” said Simon Baker, Program Director, Mobile Devices, IDC CEMA.

This slowdown in the smartphone market has a lot of implications for mobile phone vendors. The regional brands which dominate many developing markets have made their impact largely through 3G phones, sourced from China’s numerous independent handset plants clustered mainly in Shenzhen. The regional brands so far lag behind the global and big international Chinese handset players in 4G and they have looked vulnerable to failing to jump the generation successfully and lose their place.

But as growth focusses on the challenges of rural markets, the regional brands have much still on their side, especially a willingness to tackle lower tier and rural markets seriously and invest in their presence there. Even in China, where 4G is the key technology everywhere, in the last year there has been a big shift in brands as the importance of ‘lower tier’ cities and rural areas has grown in the market sales mix. Brands which put an emphasis onto serving smaller and provincial cities– for instance OPPO and vivo – have made gains, according to IDC’s Quarterly Mobile Phone Tracker. An emphasis on distribution and retail presence and promotion outside the main cities has been a key reason for their growth.

4G may be in most of the world’s big cities, but many rural areas in poor countries will not get the full benefit of the technology for years to come. There are lots of reasons for this, mainly to do with the lack of money and lower investment in mobile network infrastructure in the countryside. Although 4G subscriptions are growing fast, they are now only about neck and neck with 3G ones, according to the Ericsson Mobility Report. 3G subs will continue to grow to 2022. In Sub Saharan Africa the number of 3G subscriptions will still outnumber 4G ones by at least three to one in 2022.

The challenge of the making mobile broadband global is no longer the developing world, it is the urban rural divide. According to the World Bank almost half of the world’s population lives in rural areas. Globally this proportion is falling, but it is much higher in emerging markets, and above two-thirds for instance in India.