The market research firm exec discusses key findings from its end-of-year smartphone tracker report Globally, the number of smartphones sold rose seven percent to 1.3 billion last year, but the average price dropped six percent and revenue stalled. What are the key takeaways from Europe?

Kevin Walsh: Western Europe outperformed the global market with high-end replacement strength as well as continued overall smartphone growth.

In Q4, units sales were up 5.2 percent year-on-year while in euro terms the average selling price was up 8.5 percent leading to a healthy 13.9 percent value increase in euro terms.

However, the stronger US dollar meant that in US$ value was down one percent for the same period

Smartphone growth in unit terms slowed dramatically in Central and Eastern Europe during 2015.

Units grew less than three percent compared to 36 percent in 2014.

Value was even worse due to FX and affordability concerns and declined for the first time in 2015, down two percent in euro terms and down 18 percent in US$ terms.

How do you see the situation changing this year?   

For 2016 we still see growth in Western Europe though at a slower level with unit sales up four percent as more markets move closer to saturation.

We expect Eastern Europe to recover marginally this year with unit growth increasing to four percent versus 2.5 percent last year.

There remains significant macro and political headwinds though and higher growth levels will not re-emerge until these lessen.

Factors such as low oil prices, sanctions, political instability and FX issues will affect consumer confidence and affordability concerns

Emerging APAC countries continue to be one of the main drivers of growth; what are the key trends that European operators who have businesses there should be aware of?

The strength of Chinese OEMs and their plans to continue expanding is one area.

While most of their focus continues to be on other emerging markets there could be European opportunities to work more with operators given they have less brand sensitivities.

Increasing quality, innovation and competitive pricing from these OEMs combined with less differentiation and operator brand considerations are all positive for longer term expansion into the European markets.

The handset subsidies that operators offer to attract and retain customers continues to be a hot topic. How do you think this will evolve in 2016?

There are many different views on this topic and it depends on how the key drivers evolve.

The key drivers which affect subsidy decisions are the relative importance an operator places on customer retention versus acquisition, operator ARPU/AMPU and market competition.

As the smartphone market saturates in the next few years in Western Europe the focus moves to retention and in addition operator consolidation continues.

These both may indicate potential to reduce or transfer subsidies to other areas.

However, continued market competition, increasing consumer data consumption supporting ARPUs and the continued consumer desired to upgrade to the latest model leads me to believe no significant change in subsidy spend and strategy in 2016.

There was a lot of hype around virtual reality at this year’s Mobile World Congress; what effect do you see this having on the smartphone market?

Overall, the impact of VR on the smartphone market this year will probably be minimal but positive.

The bundling of VR products with new smartphones releases will likely encourage more upgrades than normal as well as seeding the market to encourage app development which could encourage further upgrades.

VR got more focus than augmented reality at MWC this year. However, given the mobile nature of smartphones AR enables more your cases when people are out.

While there are many challenges still to be solved and a vibrant app ecosystem is key part there is little doubt that VR/AR will continue to evolve fast and in most cases would be positive for the smartphone market.


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