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Smartphone Research Groups IDC & Telsyte Contradict Each Other Over State Of Market

Following six quarters of decline, the Australian mobile phone market has bounced back with vendors shipping 2.93M mobiles in Q4 2016, compared to 2.84M in the same period the year before claims IDC.

Arch rival Australian research firm Telsyte claims differently with their annual report claiming that the market has witnessed a 2% slowdown during the second half of 2016.

They claim that 4.1 million handsets were sold and that the iPhone 7 did not performing as strongly as previous versions.

IDC claims that the overall increase comes as research shows that consumers are holding onto their smartphones longer and that consumers are still happy with their Samsung devices despite the recall of the Note 7.

The latest IDC Data also reveals that 2.79m smartphones were handsets shipped in the last quarter whilst the remaining mobiles were feature phones.

IDC claim Apple came out on top with 54.9% share while Samsung managed to hold onto second spot with 15.6% of the market despite their share falling by 28.8% in the quarter due to the fallout from the Note 7 recall.

According to IDC iOS has again become the most popular operating system (OS) in Australia overtaking Android as it took over more than half (54.9%) of the total smartphone shipments in 2016Q4.

This has been disputed by Telsyte who claims that overall Google’s Android operating system remains the most widely used in Australia, with 56 per cent market share, ahead of Apple’s iOS that has 42 per cent.

Bilal Javed, Market Analyst at IDC Australia said “Despite new players such as Google with the Pixel device entering the market, Android could only take 44.6% market share”.

The basket case in the market are Windows Phones which declined further and now hold less than 1% market share.

Coming in at #3 is Alcatel whose share grew from 6% in 2016Q3 to 6.9% in 2016Q4 as its stronghold in the low to mid-priced segment continued.

Alcatel’s focus on a niche strategy, diversified product portfolio, along with its expanding channels allows it to maximise its customer reach claims IDC.

Huawei established itself in the quarter with 4.7% market share in 2016Q4 as it focused on mid-tier prepaid phones available through telecom operators.

IDC said that the recently launched Huawei Mate 9 as well as the flagship P series device expected in first half of 2017, Huawei will be looking to drive average selling price (ASP) higher and compete in the high-priced segment.

Google managed to gain 4.6% of the market through its exclusive partnership with Telstra and JB Hi-Fi. The dark horse, OPPO who grew over 700% YoY to grab 2.9% market share driven primarily by sales through JB Hi Fi.

In the past Oppo was exclusive to Dick Smith.

IDC also said that Apple surpassed all expectations with the iPhone 7 delivering 54.9% of the Australian smartphone market. “With over 1.5m shipments in 2016Q4 making it one of the most successful quarters for Apple in Australia since its launch” says Bilal.
Apple was able to benefit as refresh cycles on 2 year post-paid contracts approached and consumers warranted a natural upgrade. It seems Apple was also able to pounce on the void left by Samsung Note 7 for consumers seeking large screen devices with a matching spec heavy iPhone 7 Plus device.

Even as it experienced a 28.8% YoY decline, Samsung was still able to hold onto their second spot as it held 15.6% of the market. “The impact of the recall and the negative publicity surrounding Note 7 is evident here and makes the 2017 flagship even more critical for Samsung as it looks to gain share amidst other Android vendors in Australia.” adds Bilal.
While the negative publicity because of Note 7 fiasco hit, the Galaxy S series has carried Samsung in Australia with close to 80% of shipments coming from the flagship range.

One to watch out for in 2017 is the battle amongst Android vendors heats up with HTC, LG and Motorola competing for more share.

It’s also been revealed that Australians are holding on to their smartphones for longer, with Telsyte claiming both Apple and Samsung as both having relatively slow 2016 sales, ahead of an anticipated increase with the 10th anniversary iPhone launch this year.

Contradicting the IDC research which in the past has proved reliable, Telsyte claims that their annual smartphone and wearable devices market study shows a 2 per cent slowdown in phone sales during the second half of 2016 to 4.1 million handsets.

The Telsyte study also found that overall Google’s Android operating system remains the most widely used in Australia, with 56 per cent market share, ahead of Apple’s iOS that has 42 per cent.

The iPhone remains the most popular phone brand among Australians, however, despite it launching the iPhone 7 in September, Telsyte said 32 per cent of local users are still on older iPhone 5S or earlier models.

Telsyte claims Apple’s iPhone 7 sold less in its first half in Australia than the iPhone 6.

Australian sales of the iPhone 7 in the second half of 2016 were down about 10 per cent compared to the second half sales of the iPhone 6 in 2014 when the previous model was released.

The IDC report found Huawei was the second most popular Android handset maker, with HTC, Sony and LG all losing market share.

IDC said that Google’s highly-rated Pixel phone is expected to make a dent in the numbers once it has had a full period in order to be ranked.

Telsyte managing director, Foad Fadaghi, said the slowing smartphones sales were emblematic of a more matured market, which was reaching saturation and only improving devices incrementally.

“There is a natural decline that occurs with maturation of markets, but the trend is definitely towards longer replacement cycles in handsets,” Mr Fadaghi said.

“We estimate the average replacement period is now up to 2.5 years. The next big upgrade cycle we believe will be driven by 5G in three to four years’ time.”

Telsyte claims smartphone sales slowed in 2016, and the overall numbers for wristbands tanked.

Fadaghi claims 2016 saw the emergence of a number of higher quality, lower cost handsets entering the market, notably from Chinese vendors such as Oppo.

Fadaghi said these were performing well in parts of the market, but were struggling to establish themselves as long-term fixtures.

The Telsyte study reported that Australian sales of smart wristbands were tanking, with sales down 10 per cent year on year and 28 per cent in the second half of 2016 versus 2015.

It found that usage of wristbands, from the likes of Fitbit and Garmin, was likely negatively impacted by the fact that one in six purchases were given as gifts, rather than bought by the user.

Smartwatch uptake however continued to grow, and was up 70 per cent year on year, although from a small base. Telsyte estimated Apple has about 600,000 Apple watch users in Australia, and is clearly dominating the market.

In its report Telsyte forecasts that about one in four Australian smartphone users will own a smartwatch by the end of 2021.

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