Technology FOUR KEY TRENDS IN THE GLOBAL SMARTPHONE MARKET

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1 FOUR KEY TRENDS IN THE GLOBAL SMARTPHONE MARKET

2 1.2 billion smartphones were sold globally in 2014, and in the first quarter of 2015, smartphone unit demand was up +7% on the same period of last year. So what is driving this continuing success story? We ve identified four key trends influencing the global smartphone market. 1. Bigger screens Globally, sales of smartphones with larger screens (5 +) grew +180% in 2014, and have continued to drive growth in the first quarter of Share of such devices grew from 32% or one third of the global smartphone market in the first quarter of 2014, to 47% almost half in the first quarter of So it is no surprise that supersize screens are expected to be the largest sales segment worldwide in 2015, surpassing the 4 to 4.5 segment for the first time. Share of large screen devices in North America hit 70% in the first quarter of 2015, up from 59% in the same period last year, driven by strong demand for high-end models. In China, where the trend is particularly pronounced, large screen smartphone unit share grew dramatically to 57%, up from 32% in the first quarter of This significant increase in share was driven by cheaper large screen models flooding into the Chinese market. This upwards screen size migration is expected to continue in 2015, with global demand for large screen devices increasing by +30% year-on-year to account for 69% of total smartphone unit demand in Despite smartphone units declining by -14% year-on-year in the first quarter of 2015, total value actually increased by +6% year-on-year as Chinese consumers enthusiastically adopted higher priced smartphones with larger screen sizes, a trend seen in all regions. 2 Four key trends in the global smartphone market

3 Increasing share of largescreen (5 +) smartphones WORLD Q Q CHINA Q Q % 47% 32% 57% 3 Four key trends in the global smartphone market

4 2. The rise of 4G 4G-enabled devices surpassed 50% share of the global smartphone market for the first time in the first quarter of 2015, buoyed by continued price erosion of 4G smartphones. Our forecasts point to 4G device share increasing further in 2015, reaching 59% in the fourth quarter of Smartphone growth in the world s largest market, China, slowed slightly in This was due to a significant slowdown in 3G demand, which was not offset by 4G growth. We expect the China smartphone market to decline in the first half of Share of 4G-enabled devices Q , before returning to growth in the second half, driven by a continued 4G ramp-up. China saw the greatest 4G share increase in the first quarter of 2015 up 16 percentage points to 73%, from 57% in the last quarter of Smartphone growth in India and Indonesia is expected to be helped by an expanding 4G network. In Q1 2015, 4G share in both countries was well below the global average, at 4% and 7%, respectively. We estimate 4G share will increase to 7% in India and 10% in Indonesia by the end of G Q % 59% 4 Four key trends in the global smartphone market

5 3. Cheaper handsets In the first quarter of 2015, low-end smartphones those priced below $250 saw their share increase to 56%, up from 52% in Q4 2014, at the expense of high-end models ($500+), while the market share of mid-range devices ($250-$500) remained stable. Low-end smartphones those priced $150 and below are expected to gain further share in 2015, helped by continued price erosion in emerging markets. Key markets driving 4G growth INDIA Q Q INDONESIA Q Q % 7% 7% 10% 5 Four key trends in the global smartphone market

6 4. The fast growth of emerging markets The rapid growth of the smartphone market has been shown to slow at country level when saturation point is approaching. For this reason, Spain and France are expected to see a slowdown in smartphone unit growth in 2015 compared to room for growth as consumers migrate from feature phones to smartphones and existing smartphone users trade up to a device with a bigger screen. Focusing on Emerging APAC, the Indian and Indonesian markets are expected to drive growth, where low smartphone penetration leaves good room for growth. Forecast % unit growth (from 2014 to 2015 (calendar years) As such, emerging markets are key to global growth. The fastest growing regions in 2015 forecast to grow by +29% and +33% respectively are the Middle East and Africa (MEA) and Emerging APAC. Both regions still have significant % 3% 6% 8% The Latin America smartphone market enjoyed the highest growth of all regions in 2014, both in terms of units and value, driven by smartphone price erosion, 4G promotions and a boost from the World Cup. 13% 11% 33% 29% 10% 0 China Developed APAC Central & Eastern Europe Western Europe North America Latin America Middle East & Africa Emerging APAC World 6 Four key trends in the global smartphone market

7 All set for record growth in 2015 While the growth of the global smartphone market continues to be driven by these four key trends, in some local markets growth is not so strong. For example, in Central Europe where the macroeconomic situation in Russia has had a negative impact on sales, both units and value are forecast to decline. In the first quarter of 2015, global smartphone sales set a new record $96 billion. However, globally, the news remains positive for smartphone manufacturers and retailers Four key trends in the global smartphone market

8 This data was initially made public in our quarterly smartphone sales and forecasts press release: Q press release and Q press release. For more information on our device forecasts, contact Kevin Walsh GfK Trends & Forecasting T kevin.walsh@gfk.com About GfK GfK is the trusted source of relevant market and consumer information that enables its clients to make smarter decisions. More than 13,000 market research experts combine their passion with GfK s long-standing data science experience. This allows GfK to deliver vital global insights matched with local market intelligence from more than 100 countries. By using innovative technologies and data sciences, GfK turns big data into smart data, enabling its clients to improve their competitive edge and enrich consumers experiences and choices. GfK. Growth from Knowledge GfK 2015