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The company J'son & Partners Consulting is presenting basic results of the research "Russian market of mobile phones, smartphones and tablet PCs. The 1st quarter of 2016 results".

 

 

Summary of the study.

 

According to the research of J'son & Partners Consulting, during the first quarter of 2016 total sales of mobile phones and smartphones in Russia fell by 2% in comparison with the results of the 1st quarter of 2015 and by 12% compared to the pre-crisis 1st quarter of 2014. The global market of mobile devices in the 1st quarter of 2016 also demonstrated negative dynamics compared to the same period the previous year.

 

Mainly, the decline in sales can be explained by significant saturation of the market of mobile devices.

 

 

For its part, the Russian market of smartphones over the same period showed an increase: 2% compared to the 1st quarter of 2015. The share of smartphones in total sales of mobile devices in the Russian market increased up to 70 % in natural terms. It should be noted that on this parameter Russia is still inferior to the global figures according to the data from Gartner - in the 1st quarter of 2016 smartphones were 78% of the world market of mobile devices.

 

 

The tablet PC market continues to decline. Moreover, this trend is typical for both Russian and global market. According to J'son & Partners Consulting, the Russian tablet PC market declined by 37% in real terms in relation to the 1st quarter of 2015. Long service life of these devices, as well as competition with big-screen smartphones affects the drop of the tablet computer market, which began in 2015.

 

It should be noted that compared to the 1st quarter of 2014 the Russian tablet computer market has fallen by nearly 50 %, and the global tablet market has fallen by 21% in real terms.

 

 

 

The main trends in the smartphone market in the 1st quarter of 2016:

 

  • The trend to lower average retail prices of a smartphone ended in 2015, in connection with the devaluation of the ruble. In the 1st quarter of 2016 the average price of a smartphone continued to grow and by the end of the 1st quarter of 2016 reached 12 thousand rubles – this is the highest value in the Russian market since 2010.
  • The share of LTE-smartphones in the total sales of smartphones in Russia is growing rapidly. In the 1st quarter of 2016, LTE smartphones had around 42% of the total smartphone market in natural terms, it is more than two times higher than in the 1st quarter of the previous year. One of the main reasons for this growth is expansion of the assortment of devices in mid and budget price segments.
  • The share of Windows Phone is declining, both in Russia and in the world in whole. Smartphones on the Windows Phone platform In the Russian market in the 1st quarter of 2016 took 2.4% of the total smartphone market in natural terms. It should be noted that in the 1st quarter of 2015, the share of operating system from Microsoft was 7.3 %.
  • In the 1st quarter of 2016 sales of phablets (smartphones with a screen diagonal of 5 inches and more) two times exceeded the total Russian market of tablet PCs.

 

 

Some views of the representatives of the industry

 

Maria Zaikina, PR-director of "Svyaznoy"

– How do you assess the sales results of mobile devices in early 2016? What factors, in your opinion, can contribute to the growth of demand for mobile devices and will sales reach pre-crisis level this year?

 

– At the end of the 1st quarter smartphone sales in Russia grew by 7% in units and 34% in rubles compared to the 1st quarter of 2015. Totally in our country during January-March, it was sold about 5.8 million smartphones worth over 70 billion rubles. The average cost of a smartphone during the year increased by 24 % from 9800 to 12 100 rubles.

 

In early 2016, the smartphone market shows a more positive trend both in pieces and in rubles compared to the same period last year. This is due to several factors: increase of the average purchase amount of a smartphone and the abnormal demand of the 4th quarter of 2014.

 

The growth of both the average purchase amount and the total market in rubles in the 1st quarter was made possible due to increasing the sales of individual smartphone models and brands, in particular iPhone. In the 1st quarter iPhone again, as by the end of 2015, has given Russian retailers the highest earnings in comparison to sales of other smartphones. Sales dynamics of iPhone in the 1st quarter of 2016 was several times higher than the market’s dynamics in whole. Also, a significant increase was shown by LG, Asus, Lenovo. All these brands are in the top 5 in share of the smartphone market in rubles in Russia.

 

Unit sales of iPhone, Asus, LG, Lenovo also grew substantially more than the market: dynamics ranged from 20 % to 125% relative to last year depending on brand.

 

Another reason for the growth in January-March 2016 compared to the previous year was a jump of currency exchange rates at the end of 2014 which impacted the demand in the 1st quarter of 2015. We must recall that a significant part of the demand of the 1st quarter of 2015 had been satisfied before New Year holiday, with the result that the market decreased a year ago.

 

Sales of tablet computers in Russia continue to decline. The market decrease has slowed down a bit compared to the previous year. At the end of the 1st quarter of 2016, the segment of tablet computers in Russia decreased by 26% in units and by 19% in rubles. Totally it was sold about 1.16 million units in the amount of about 11 billion rubles. The average cost of a device in the 1st quarter of 2016 was about 9500 rubles, having increased during the year by about 10%. The average cost in the category of tablets increased not as much as compared to smartphones because of the high share of the budget devices in the total sales of tablet PCs.

 

The tablet PC segment is shrinking under the influence of the economic situation and because of the growing popularity of the phablet market – smartphones with screens over 5 inches.

 

By the end of 2016 we do not expect the return dynamics of unit sales of smartphones to the pre-crisis figures, as people are not getting more money, and the prices on gadgets in average will not drop regarding 2015. The smartphone market dynamics in RUR will probably surpass pre-crisis levels, but it will be caused not by increased demand, but higher device prices. Recall that, by the end of 2014, the smartphone segment grew by 39 % in units and 25% in rubles. The growth of proceeds from smartphone sales in the 1st quarter is already much higher.

 

In the segment of tablets, we forecast a decrease of sales, while by the end of 2016 it will be less significant than in 2015. A tablet computer replaces many other devices, and buyers continue to purchase a tablet as a replacement for the e-book, laptop and more low-end models, for example, instead of a navigator. In this category of electronics, we do not expect a return to pre-crisis levels, not only because of the current economic situation, but also because of the oversaturation of the market and a longer replacement period of a tablet computer compared to a smartphone.

 

As for the other categories of personal electronics – cameras, e-books, navigation devices, notebook computers, these markets "collapse" due to objective reasons: due to the impact of smartphones and tablets.

 

In 2016 many large cellular retail companies reduced their device prices. What impact has this had on the Russian market of mobile devices? In your opinion, how will this impact on the share of smartphones and tablets from A-brands?

 

– Svyaznoy reduced the prices for gadgets in early April. Totally these discounts affected approximately 1,300 positions of the retailer’s assortment in the online and offline channels. Both A-brands and B-brands are involved. Lowering the prices, we attracted new buyers, for whom, in the current economic conditions, an attractive offer becomes one of the main factors of the purchasing decision. The company received additional income from additional products and services like accessories, SIM-cards, insurance policies and financial products.

 

The price reduction touched basically smartphones and we see the impact of our activity on the market: we see dynamics of growth in relation to sales of smartphones in general and of particular brands of smart phones.

 

How do you estimate prospects of development of Russian mobile devices market in the next few years? Does it increase the demand for wearable gadgets?

 

– The market of wearable gadgets is the "youngest" in Russia among all segments of the personal electronics and it is at an early stage of its development. Now it is one of the few markets in Russia that continue to grow related to last year. For example, in "Svyaznoy" sales of wearable electronics in the 1st quarter grew three times in rubles compared to the same period of the previous year. Now the market is not saturated.

 

Among other factors of sales growth of these devices, it is worth noting their newness. Despite the fact that smart wearables are widely available on the market more than a year, for many people they are still new and original devices that can not only expand the functionality of a smartphone, but in some cases, they can become fully independent accessories that do not require constant synchronization with your smartphone/tablet.

 

Also among accelerators of the smart wearables market, we can note the cost of the devices: the assortment of smart gadgets is quite large in the segment up to 5 thousand rubles.

 

The two most popular categories of wearable devices are smart watches and different kinds of sports bracelets, which are widely presented in retail networks. Other types of smart wearables are more niche and, in fact, do not affect the market. The largest share of fitness bracelets (in pieces) is taken by smart watches. This is explainable, because clocks in general are more expensive.

 

 

Julia Dorokhina, head of the press service of OJSC "MegaFon"

How do you assess the sales results of mobile devices in early 2016? What factors, in your opinion, can contribute to the growth of demand for mobile devices and will sales reach pre-crisis level this year?

 

– According to the company "MegaFon", sales of smartphones in the Russian market in the first quarter of 2016 increased by 6% in quantity and by 31% in monetary terms compared to the same period of 2015, while sales of mobile phones declined by 11% in quantity and by 18 % in monetary terms. Smartphones remained the only large segment of the portable electronics market with growing revenues. In the first quarter of 2016 smartphones continued replacing simple mobile phones: the share of smartphones in total sales of mobile phones and smartphones increased from 66 % (1Q15) to 70 %, consequently, the share of mobile phones decreased.

 

Sales of tablets in Russia in the first quarter of 2016 have fallen on average by 20-30% compared to the same period in 2015, while sales of tablets in the retail network of "MegaFon" increased by 85%. The main driver of the growth were budget tablets, which provide the main sales of MegaFon, and promotions. Sales of budget tablets with costs up to 5 thousand rubles for each in the first quarter of 2016 increased by almost three times, they are about 70 % of all company’s sold devices.

 

Changes in the economy have had an impact on purchasing power, but consumers have not abandoned shopping smartphones and tablets, they have become more rational in selection of gadgets paying attention to the ratio of price and functionality of the device. In its turn, "MegaFon" offers the opportunity to buy devices on credit or by installments, and provides buyers interesting and affordable package offers with at a favorable price. For a customer a purchase of equipment in frames of a promotional campaign is a profitable offer, he/she gets not only the device, but also the opportunity to use mobile Internet. Mobile devices with the convenient access to the Internet are the main driver of sales growth.

 

In 2016 many large cellular retail companies reduced their device prices. What impact has this had on the Russian market of mobile devices? In your opinion, how will this impact on the share of smartphones and tablets from A-brands?

 

– The average price in the smartphone market in 1Q16 against 1Q15 increased by 23%. In 2016 the largest Russian mobile retailers announced lower prices for smartphones, but this is not reflected significantly on the average price of a purchased smartphone in the market, it decreased by only 2%. With discounts for smartphones by average 20%, the buyers began to purchase expensive equipment, which did not allow to reduce the price on the market.

 

In circumstances when the buyer is looking for a good at an attractive price, the new producers show high flexibility in pricing and offer the goods on the terms which are interesting for both the client and retailer. Over the past year, the share of B-brands in sales of mobile equipment grew significantly and now the share of these devices in sales is nearly 65%. The largest increase are shown by such vendors like ZTE, Lenovo, LG and Micromax.

 

How do you estimate prospects of development of Russian mobile devices market in the next few years? Does it increase the demand for wearable gadgets?

 

– The mobile market is saturated, in 2016, it may show a slight increase or remain in the same position compared to 2015, but the substitution of mobile phones for smartphones will continue. Over the past year we saw a significant increase of the share of smartphones supporting LTE in the total sales of smartphones in pieces, at the end of 1Q16 this growth was 33% (+24% to 1Q15). The range of devices supporting the next stage of development of mobile technologies, LTE Advanced, has also significantly expanded, so we expect sales growth of smart devices.

 

The rise in tablet sales is possible in the period of seasonal activities and special offers, but in general it is not predictable.

 

Oleg Fomenko, head of Department for procurement and management of subscriber equipment, PJSC "VimpelCom"

How do you assess the sales results of mobile devices in early 2016? What factors, in your opinion, can contribute to the growth of demand for mobile devices and will sales reach pre-crisis level this year?

 

– In the first quarter we saw a positive trend of sales of mobile devices compared to the same period last year. For example, the total number of smartphones sold in the retail year-on-year increased by 73% and the income from thе sale of smartphones increased by 78%. The most popular smartphones in the first quarter of 2016 are branded smartphones: "Beeline", 4GOOD, Apple, Alcatel, Lenovo. In the first quarter of 2015, the top five looked like this: Beeline, Alcatel, Samsung, Nokia, Fly. Tablet sales in the first quarter of 2016 year increased year-on-year by 34%, and the revenues from the sale of them – by 71%. The most popular tablets were: Irbis, "Beeline", Prestigio, Oysters, Archos. In the first quarter of 2015 customers often bought tablets Beeline, Alcatel, HP, Lenovo and Prestigio.

 

In 2016 many large cellular retail companies reduced their device prices. What impact has this had on the Russian market of mobile devices? In your opinion, how will this impact on the share of smartphones and tablets from A-brands?

 

– In the current economic situation, the demand for affordable mobile devices is growing. In the 1st quarter of 2016 the share of smart phones of a price category “0-3 thousand rubles” in sales increased to 49% compared to 36% in the 1st quarter of last year. In the segment of 3-5 thousand rubles the share of sales fell from 25% to 18% and in the segment of 5-10 thousand rubles the sales decreased from 26% to 21%. Of course, in the current conditions, the price of gadgets is one of the tools of competition. This year we have reduced prices for more than 60 models of mobile devices. Moreover, depending on the model, the decline was from 4 to 22 % in both offline and online.

 

How do you estimate prospects of development of Russian mobile devices market in the next few years? Does it increase the demand for wearable gadgets?

 

– In the next few years we do not expect significant changes in the growth of the smartphone market.

 

– Does the demand for wearable gadgets grow?

 

– Sales of wearable gadgets have reached a certain level and their growth stabilized.

 

Viktor Lukanin, Executive Vice President of the company "Euroset"

The demand for mobile devices could increase significantly in cases of the most  valuable offers from manufacturers – low price for a quality device with advanced functionality. We believe that the level of consumption of cell phones and smartphones in total in 2016 will be at the level of 2015 or slightly lower, which is due to the continuing recession in the economy. We expect to achieve and exceed the pre-crisis level around 2018.

 

"The April decline in prices", initiated by "Euroset", had a beneficial impact on the whole market. Smartphones have become more affordable for the people, allowing them to buy the most expensive devices. It is a visual confirmation of the increase in sales of smartphones in the expensive segment. In addition, we see an increase in the frequency of purchases and average check growth.

 

The Russian market of mobile devices will continue to grow, in particular due to the growing demand for wearable gadgets. Modern conditions require a person to be supermobile, and wearable gadgets become his/her main assistants. Today an ultra-compact mobile device can replace a desktop computer and even surpass it in functionality.

 

LTE technology is definitely interesting to consumers and will continue its development. This technology is yet in demand only for a narrow part of the population. For the masses this acronym still means not much, so the choice in favor of LTE devices is done unconsciously, and often under the influence of advertising. Nevertheless, it is difficult for 4G users to return to the standards of the level below, like 3G. Accordingly, they unwittingly become hostages of LTE. To date, the operators’ policy is focused on how to attract subscribers to LTE networks explaining to the mass consumer the benefits of this data transfer standard. In addition, today new brands with new models, starting from the middle price segment, began by default to declare their support for 4G. This factor has also been the driver of growth of new brands. Prospects for the development of these devices on the market are really wide.

 

The trend to expand the range of mobile devices that support NFC will continue. Today, almost all smartphones have this feature, as manufacturers understand that this service is the future of cashless payments. In confirmation of this we see the increase in the number and volume of contactless payments transactions, which has recently been launched by "Euroset" with the card “Kukuruza”(Russian for “Corn”).

 

The main trend of the future is the integration of Wellness-platform in smartphones that will allow people to maintain a healthy lifestyle with help of their device.

 

 

Detailed results of the research presented in the full version of the report "Russian market of mobile phones, smartphones and tablet PCs. The results of the 1st quarter of 2016"

 

An example of the contents of the report:

 

1. Russian market of mobile phones and smartphones, key indicators

 

1.1. Market volume of mobile phones and smartphones in natural and monetary terms

1.1.1. Market volume of mobile devices in natural terms, 2013 – Q1 2016 (quarterly dynamics)

1.1.2. Market volume of mobile devices in monetary terms, 2013 – Q1 2016 (quarterly dynamics)

1.1.3. Sales structure of mobile devices: smartphones and mobile phones in natural terms, 2013 – Q1 2016 (quarterly dynamics)

1.1.4. Sales structure of mobile devices: smartphones and mobile phones in monetary terms, 2013 – Q1 2016 (quarterly dynamics)

1.1.5. Market structure of smartphones by operational systems, % of sales in natural terms, 2013 – Q1 2016 (quarterly dynamics)

1.1.6. Market structure of smartphones by operational systems, % of sales in monetary terms, 2013 – Q1 2016 (quarterly dynamics)

 

1.2. The average retail price of a mobile device, market structure by price segments

1.2.1. Quarterly dynamics of the average retail price of a mobile device, 2013 – Q1 2016 (quarterly dynamics)

1.2.2. Quarterly dynamics of the average retail price of a smartphone in Russia, 2013 – Q1 2016 (quarterly dynamics)

1.2.3. Market structure of mobile devices by price segments, % from sales in natural terms, 2013 – Q1 2016 (quarterly dynamics)

1.2.4. Market structure of smartphones by price segments, % from sales in natural terms, 2013 – Q1 2016 (quarterly dynamics)

1.2.5. Market structure of mobile phones by price segments, % from sales in natural terms, 2013 – Q1 2016 (quarterly dynamics)

 

2. Main manufacturers of mobile devices

 

2.1. The market structure dynamics of mobile devices by manufacturers, % from sales in natural terms, 2013 – Q1 2016

 

2.2. The market structure dynamics of mobile devices by manufacturers, % from sales in monetary terms, 2013 – Q1 2016

 

2.3. Dynamics of structure of smartphones by manufacturers, % from sales in natural terms, 2013 – Q1 2016 (quarterly dynamics)

 

2.4. Dynamics of structure of smartphones by manufacturers, % from sales in monetary terms, 2013 – Q1 2016 (quarterly dynamics)

 

2.5. Short profiles of manufacturers

 

2.6. Operator’s mobile devices market, 2013 – Q1 2016 (quarterly dynamics)

 

3. The average functionality of a smartphone sold in Russia, 2013 – Q1 2016

 

3.1. Support two or more SIM cards

3.1.1. Market structure of smartphones supporting/not supporting two SIM cards in natural and monetary terms

3.1.2. Market structure of smartphones supporting two SIM cards by manufactures in natural terms

3.1.3. The average retail price of smartphones supporting two SIM cards. Market structure of smartphones supporting two SIM cards by price segments

 

3.2. Support LTE

3.2.1. Market structure of smartphones with/without LTE in natural and monetary terms

3.2.2. Market structure of smartphones with LTE by manufactures in natural terms

3.2.3. The average retail price of LTE smartphone. Market structure of LTE-smartphones by price segments

 

3.3. NFC support

3.3.1. Market structure of smartphones with/without NFC in natural and monetary terms

3.3.2. Market structure of smartphones with NFC by manufacturers in natural terms

3.3.3. The average retail price of NFC-smartphone. Market structure of NFC-smartphones by price segments

 

4. Russian tablet market, key indicators

 

4.1. The volume of tablet market in natural terms, 2013 – Q1 2016 (quarterly dynamics)

 

4.2. The volume of tablet market in monetary terms, 2013 – Q1 2016 (quarterly dynamics)

 

4.3. The tablet market structure by operational systems, % of sales in natural terms, 2013 – Q1 2016 (quarterly dynamics)

 

4.4. The tablet market structure by operational systems, % of sales in monetary terms, 2013 – Q1 2016 (quarterly dynamics)

 

4.5. The tablet market structure by manufacturers, % of sales in natural terms, 2013 – Q1 2016 (quarterly dynamics)

 

4.6. The tablet market structure by manufacturers, % of sales in monetary terms, 2013 – Q1 2016 (quarterly dynamics)

 

5. Forecasts and trends, 2016-2020

 

5.1. Forecast of the mobile devices market in natural terms, 2016-2020

 

5.2. Forecast of the mobile devices market in monetary terms, 2016-2020

 

5.3. Forecast of the smartphone market in natural terms, 2016-2020

 

5.4. Forecast of the smartphone market in monetary terms, 2016-2020

 

5.5. Forecast of the tablet market in natural terms, 2016-2020

 

5.6. Forecast of the tablet market in monetary terms, 2016-2020

 

 

The newsletter prepared by the J'son & Partners Consulting. We work hard to provide factual and prognostic data that fully reflect the situation and which are available at the time of the release. J'son & Partners Consulting reserves the right to revise the data after publication of new official information from particular players.