The smartphone growth in the Asia Pacific region is set to slow to 10 percent in 2015 from 17 percent in 2014 and 43 percent in 2013, said ABI Research.
China Mobile’s decision to cut handset subsidies by $2 billion over the next 3 years will be the main impact on the smartphone growth.
“China Unicom and China Telecom followed with their own cost-cutting plans. This is in response to the state-owned Assets Supervision and Administration Commission directive to carriers to cut costs on subsidies and marketing,” said ABI Research Senior Practice Director Nick Spencer.
A reduction in subsidy will accelerate the move in smartphone volume from high-end ($400+) to mid and low (sub-$200) tiers, placing pressure on smartphone vendors such as HTC, Samsung, Sony, HTC, and Apple.
China’s smartphone OEMs will start to look outside of China to sustain its growth plans. Xiaomi and Lenovo made moves outside of China with others to follow suit.
The overall growth of the handset market and smartphone market is beginning to slow, as it moves into the less affluent demographics. These demographic groups are clearly cost constrained and also typically have a much longer handset life cycle, which is nearer to 4 years than the 2 years in advanced markets.
The sub-$200 smartphone tier will see growth of 14 percent from 2014 to 2019, whereas the $400+ tier will see growth of 5 percent.