More Smartphones Were Sold Last Year, Yet Revenue Dropped, Thanks To Cheap Phones

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In the past couple of years, the smartphone market has become a world of stiff competition and last year especially, we saw a massive rise is “the race to the bottom”. Left and right we were seeing smartphones like the Alcatel Idol 3, Moto X Pure Edition, and even the Nexus 6P offering specs and quality well beyond what their price point would validate. Thanks to those phones, we’re seeing a shift in the market.

Last year smartphone sales grew by over 6% with a record 368 million devices sold. However revenue from those sales actually dropped, albeit not by much, to $115.2 billion, 0.2% less than the previous year. Why? The basic answer is that phones got less expensive. Rather than selling devices upwards of $600, $700, more and more OEMs are targeting prices well under $500. In India in-fact, there was a 34% increase in sales of devices that cost under $100. However, why did OEMs lower prices?

Local factors, rather than regional and industry trends, are increasingly driving markets. Diverging economic trends, device saturation, mass market adoption, politics, social change and even sport have an impact on smartphone demand and prices at country level.

To keep up, even OEMs like Apple and Samsung have been at least considering better low-cost options. The Galaxy S6 has seen numerous discounts over the past year and Apple is even working on a 4-inch iPhone which is expected to come in at $500.

Going into 2016, projections state that things are going to stay about the same. Cheap phones will likely keep growing, however overall sales will probably stay flat.

Source: Venture Beat