Rural telecom markets drive smartphones

Research reports conclude that smartphone growth in the second quarter of the year was mainly owing to connected consumers in emerging markets, especially that of rural China.
Resilient mid- to high-end sales have led to the 2016 smartphone market value forecast being amended to USD 426 billion, with no immediate impact in the UK from Brexit, as per GfK reports.
Full year global smartphone sales value in 2016 hiked from USD 400.7 billion to USD 426 billion, up by five percent YoY, owing to strong sales of mid-range to high-end units reversing the previous trend of low-end sales.
Reports also point out that volume growth is mainly from emerging markets, mainly in China, Asia and Africa. Not only sales in the major cities and the shipments of global manufacturers but also consumers in rural areas are also driving the growth, with local vendors making the most of it.
In North America, smartphone demand touched 42 million units in 2Q16, down by five percent quarter-on-quarter and six percent year-on-year. The reasons behind these are slow growth rate and less effects of previous drivers of demand, such as the migration from feature to smartphone and 3G to 4G. In addition, churn rates have fallen in response to carrier’s retention strategies, including family plans.
The market is now expected to span by 4Q in North America, with many major product launches lined up for the final quarter of the year, which may have a higher impact in 2016 compared to 2015. Consumers have also been waiting for big launches will be ready to invest in upgrades.
Smartphone demand summed up to 30 million in 2Q16, a fall of one percent both quarter-on-quarter and year-on year. 
The decline was felt most sharply in Spain, where demand declined 11 percent YoY, owing to the country’s three leading operators raising their annual tariffs by an average of EUR 30. 
In the UK, demand declined two percent year-on-year in 2Q, continuing to be unaffected by Brexit. 
The above downfalls have been covered to some extent by three percent growth in France and one percent growth in Germany.
Demand for devices sized 5″ and above will go up from 38 percent in 2Q15 to 60 percent in 2Q16.Also the share of demand for high-end smartphones costing more than USD 500 has risen from from 31 percent in 2Q15 to 35 percent in 2Q16, with unit growth of 12 percent YoY. Smartphone demand in the region will fall to 134 million units in 2016, dropping by one percent YoY.
In Central and Eastern Europe, smartphone demand touched 17 million units in 2Q16, down by one percent quarter-on-quarter and up by 12 percent year-on-year. Russia saw growth with 12 percent year-on-year after five quarters of decline, while held up demand release in Ukraine lead to strong growth of 35 percent YoY trailed by six consecutive quarters of decline. 
The smartphone demand for the area will go to 77 million units in 2016, eight percent more YoY.
Smartphone demand became 23 million units in 2Q16, hiking by five percent quarter-on-quarter, but dipping eight percent year-on-year, reason being a fall in demand of 20 percent year-on-year in Brazil. The removal of import restrictions in December 2015, led to growth in Argentina at 58 percent YoY. The demand in the region will decline to 94 million units in 2016, a drop of 11 percent YoY, as per GfK forecast.
In the Middle East and Africa smartphone demand became 41 million units in 2Q16, down by two percent quarter-on-quarter, with year-on-year growth lagging by five percent.
The recession in Saudi Arabia market has caused a fall of 24 percent YoY in 2Q 2016, which was partially balanced by 19 percent in Egypt and 15 percent YoY in South Africa.
GfK forecasts that smartphone demand in the region will grow to 176 million units in 2016, up nine percent year-on-year.
In China, rural sales will show maximum growth for over two years, with smartphone demand equaling 109.7 million in 2Q16, with a steady quarter-on-quarter, with 24 percent YoY. The growth will go from 19 percent in 1Q16 to the highest in over two years, driven by continued operator subsidies to lead to strong 4G smartphone adoption in the smaller cities, with local brands benefited from growth outside the major cities with the smartphone market share increasing from 74 percent in 2Q15 to 81 percent in 2Q16.
Users are following the trend to opt for larger screen sizes, with the 5″+ share increasing to 83 percent in the quarter, a boost from 63 percent in 2Q15. 
GfK forecasts that smartphone demand growth in China will be moderate in the second half of the year, with 439 million units, up 14 percent year-on-year.
The demand declined nine percent YoY in Australia, and two percent in Japan in the same period, with net forecasts for the region touching 72 million units in 2016, a decline of one percent YoY.
Also, growth in Philippines, at 37 percent YoY and Vietnam with 11 percent YoY has turned the net region demand going up by three percent quarter-on-quarter and four percent year-on-year to 51 million units. Indonesia witnessed a decline of 0.3 percent with forecasts that demand in the region will reach 213 million units in 2016, a growth of five percent year-on-year.
The report from GfK also conveys that overall smartphone market expanded further in 2Q16, with the remaining lined up product launches set to further increase demand by the year end. Also, innovations such as extended battery life and foldable displays aid market growth with 5G upgrades awaited by the end of the decade.