Global device shipments to decline for second year in a row

The global device market for PCs, tablets, ultramobile and mobile phones fell by 0.75 percent in 2015, and it is expected to decline 3 percent in 2016, according to Gartner.

“The global devices market is not on pace to return to single-digit growth soon,” said Ranjit Atwal, Research Director at Gartner.

Gartner is expecting all segments to decline in 2016, except for premium ultramobile and utility mobile phones, which are expected to show single-digit growth this year.

The report also highlighted that the despite the availability of the iPhone 7, a weaker year-over-year volume performance is expected from Apple in 2016, as volumes stabilize after a very strong 2015.

The total mobile phone shipments are on pace to decline 1.6 percent in 2016. The smartphone segment continues to grow, albeit more slowly than in previous years, and is expected to reach 1.5 billion units in 2016. "This is no surprise; the smartphone market is maturing, and reaching global saturation with phones that are increasingly capable and remain good enough for longer," said Roberta Cozza, research director at Gartner.

"We expect the market for premium smartphones to return to 3.5 percent growth in 2017, as stronger replacement cycles kick in and in anticipation of a new iPhone next year, which is expected to offer a new design and new features that are attractive enough to convince more replacement buyers," said Cozza.

As a result, Gartner expects total smartphone market to only increase 4.5 percent with premium smartphones declining 1.1 percent in 2016.

"We expect premium ultramobile (such as Microsoft's Windows 10 Intel x86 products and Apple's MacBook Air) will start benefiting from the collective performance and integration of the latest Intel CPU platform and Windows 10," added Atwal.

The Ultramobile (Basic and Utility Tablets) category includes devices such as iPad, iPad mini, Samsung Galaxy Tab S2, Amazon Fire HD, Lenovo Yoga Tab 3, Acer Iconia One.

Worldwide PC shipments totaled 68.9 million units in the third quarter of 2016, a 5.7 percent decline from the third quarter of 2015. This was the eighth consecutive quarter of PC shipment decline, the longest duration of decline in the history of the PC industry.

The PC market is expected to exhibit an 8 percent decline in 2016, as the installed base bottoms out and replacement cycle extensions halt. "The effect of currency depreciation on the market is diminishing. The second quarter of 2016 was the first since the second quarter of 2015 least impacted by currency depreciation,” said Atwal.

Regions such as Western Europe, where the Euro depreciated significantly in 2015 and PC prices increased, finally showed flat market growth (-0.9 percent) in the second quarter of 2016. This follows four consecutive quarters of decline.

If this situation prevails, PC sales will bottom out in 2016. However, the PC market in Western Europe remains difficult following the Brexit vote. "Device vendors are mitigating the currency depreciation of the pound in two ways — first, they are taking advantage of the likelihood of a single-digit decline in PC component costs in 2016," said Atwal. "Second, they will "de-feature" their PCs to keep prices down. With these changes, Gartner expects PC prices in the UK to increase by less than 10 percent in 2017."

For the PC market to stay on pace for flat growth in 2017, business spending needs to flourish. "The inventory of Windows 8 PCs should have been cleared, and large businesses in mature markets are now looking to move to Windows 10 through 2018. In addition, more affordable hardware and increasingly available virtual reality content (such as games, stories, and other entertainment) will enable consumer PC buyers to upgrade in order to experience immersive offerings,” said Atwal.