J'son & Partners Consulting presents general results of the study "The Russian smartphone market. Results of 2016 ".
Dynamics of the Russian mobile phone and smartphone market
According to J'son & Partners Consulting, in 2016 the volume of the Russian smartphone market in physical terms amounted to 26.4 million devices. Compared to 2015, the market grew by 4.4%, compared to 2014 — by 1%. Thus, we can say that the smartphone market is gradually beginning to recover from the consequences of the devaluation of the ruble, and users are beginning to get used to the new realities and adapt to new prices. The share of smartphones in the total sales of mobile terminals (total sales of mobile phones and smartphones) in 2016 was about 71% in physical terms, which is 5 percentage points higher than the year before.
Source: J’son & Partners Consulting
The growth of smartphone sales continues to affect many related markets, including the market for conventional mobile phones. According to J'son & Partners Consulting, the Russian mobile phone market continued to decline in 2016 and amounted to 10.8 million units. Nevertheless, conventional phones still occupy about the third part of the market for mobile terminals. They still remain in demand among temporarily staying citizens, pensioners, children, and as a spare device for smartphone users.
The average cost of these devices decreases along with the sales in physical terms. According to J'son & Partners Consulting, in 2016 it decreased by 6% compared to 2015 and amounted to 1.7 thousand rubles for a unit.
Source: J’son & Partners Consulting
The main trends on the Russian mobile phone and smartphone market
➢ Intensive growth of smartphones supporting LTE
In 2016, every second smartphone supported high-speed Internet technology LTE. Sales of smartphones with the LTE-module more than doubled in 2016 compared to 2015. The main drivers of the market growth are an increase in the range of LTE devices, a decrease in their average cost, as well as an increased demand for devices of the middle and premium price segment.
➢ Increase in average retail prices for smartphones
The average retail price of smartphones grew by 22% in 2016 compared to last year and amounted to 12.1 thousand rubles. This is the highest average retail price for a smartphone since 2009. The increase in prices compared to last year was affected by the growing demand for devices of the price category "above 15 thousand rubles", which, in turn, contributed to the increase in sales of devices purchased on credit.
➢ Growth of the smartphone display size
The average display diagonal size of the smartphone sold in Russia in 2016, was 4.6 inches. In addition, the share of smartphones with diagonals of 5 or more inches increased from 31% in 2015 to 46% in 2016. The growth in sales of smartphones with a large display size affects the increase in use of video content, TV and applications.
Source: J’son & Partners Consulting
➢ Growth in the share of Chinese manufacturers
The trend that started before beginning of the economic crisis continued after the devaluation of the ruble. A number of popular manufacturers in the formation of the Russian smartphone market - Sony, HTC, Nokia / Microsoft - totaled only 5% of the smartphone market in physical terms in 2016. Chinese companies that sell devices at a more attractive price are occupying their place. In 2016, according to J'son & Partners Consulting, in the top ten of the best-selling manufacturers in Russia, Chinese companies occupied half of the positions.
The market participants’ remarks
– What are the trends in the Russian smartphone market in 2016?
– The average price of a smartphone sold in the branded stores of MegaFon increased by 38.5 % in 2016, to 7501 rubles against 5390 rubles in 2015. Consumers have become accustomed to the economic situation and are gradually adapting to its conditions. The customer purchasing power also increases, during the last year our customers were buying more expensive smartphones in MegaFon Retail. We see a redistribution of the market from budgetary devices (hits of 2015) to devices of medium and high price segment. As a rule, devices costing from 10 thousand rubles have high performance, large and high-quality screen and LTE support.
Taking into account the list of sales leaders, I can note that the buyer still saves on the brand, preferring inexpensive products, but does not save on the functionality of devices, wanting to use multi-functional and productive gadgets.
One of the significant trends of the past year was the growth in sales of LTE-smartphones. The growth of sales of smartphones with LTE in the last months of 2016 will increase the volume of Internet traffic in Q1-Q2 2017, which, we hope, will be transformed into the growth of MegaFon's revenues by offering customers package tariffs with a large volume of services.
– How do you estimate the prospects for the smartphone market in 2017? What is the future of conventional mobile phones? Will they be in demand in the future or eventually disappear?
– In the stores of "MegaFon Retail" after 9 months of 2016 from the total number of sold phones smartphones are about 62%. There is a potential for increased penetration in the coming years, so we are confident that in 2017 the penetration of smartphones into MegaFon's subscriber base will continue to grow. The number of digital clients actively using capabilities of mobile Internet and applications will also increase. At the same time, although, push-button phones are being replaced by smartphones, they will continue to be popular for certain categories of subscribers (primarily children, elderly people). Over time, their number will decline, but they will not go away from the market completely.
– What are the trends in the Russian smartphone market in 2016?
– According to our data, the smartphone market in Russia in 2016 increased both in pieces and in rubles.
The growth in 2016 was affected by several factors. The smartphone is becoming more and more universal device. With the development of technologies, one gadget can combine more and more useful functions. The smartphone partially replaces the digital camera, laptop, personal computer. Phablets (smartphones with a size more than 5 inches) due to the optimal size for the buyer successfully compete with tablets and electronic books.
The positive dynamics in the smartphone segment was also affected by the increase in availability of credit products compared to 2015. A wide range of credit products, especially installment programs available in the stores of large retailers, allows customers to reduce the burden for their own budget and distribute it for a long period.
Among the growth factors of the smartphones sales in 2016, you can also allocate deferred demand for 2015 and the ongoing process of replacing conventional mobile phones with smartphones. During the period of excitement in October-December 2014, the demand for smartphones grew significantly many customers, being afraid of a price rise for electronics, bought a smartphone during the jump in exchange rates.
The market in 2016 increased in rubles more than in pieces. The higher dynamics is due to the growth in demand for gadgets of the high price segments, in particular the entire iPhone range, which is sold in all categories over 20 thousand rubles. The popularity of the iPhone also spurred the release of new products in October 2016.
– How do you estimate the prospects for the smartphone market in 2017?
– We expect that in 2017 smartphones will continue to be the main communication devices ("the first screen") and will continue to affect the sales of other personal electronics categories. According to our forecasts, the unit sales of smartphones in Russia in 2017 will at least remain at the level of 2016.
The non-decreasing popularity of smartphones will drive the growth of certain categories of personal electronics (for example, smart-wearables) and continue to negatively affect the sales in other segments (for example, in the category of tablets, digital cameras, e-books, etc.).
– What is the future of conventional mobile phones? Will they be in demand in the future or eventually disappear?
– In our opinion, ordinary mobile phones still have their own audience, they remain in demand among a number of buyers. This is due, firstly, to the fact that in our country there is a large number of people for whom the basic functionality of the phone – calls and SMS – is sufficient for everyday needs. Secondly, the price of a button device is lower than that of a smartphone, and for a number of buyers the cost is a decisive advantage.
In the short term, button phones will not leave the market, as there are several categories of buyers who prefer the simplest devices. Mostly these are people of the older generation.
– The smartphone market is gradually recovering. It is obvious that the Russian market of cell phones and smartphones is steadily stabilizing, primarily due to the growth in sales of smartphones. Nevertheless, the buyer has not yet recovered from the long crisis, and the rational approach to the consumer basket continues to dominate, primarily due to the choice of the most beneficial offer on the ratio of price / quality and purchase of devices on credit.
Smartphones demonstrate a positive dynamics in the number of sales. This trend is due to an increase in the proportion of devices purchased on credit. Last year the policy of banks with regard to consumer lending was restrained and banks were reluctant to give out loans to the population, but in 2016 their worldview changed and the number of loans increased significantly. Loyal policy of banks allowed the population to purchase more expensive phone models, which provokes an ongoing increase in the average price. Retailers, in turn, offer buyers a large number of loan products with the maximum benefit. In particular, installments served as the strongest impetus for the entire market, which significantly caused an increase in the average price of a smartphone.
We see that people have become more likely to buy more expensive smartphones, so the average price on the market has increased. The smartphone, which yesterday cost several thousand more, became available at a more attractive price, which allowed the population to purchase premium devices. Thus, the April decline in prices pumped almost all segments, but especially premium smartphones from 20 thousand rubles.
The economic situation affected the segment of cellular phones (devices without OS) the least. The demand for such devices has already reached its saturation, and even some stabilization of the economic situation does not allow the cellular phone market to return the pre-crisis positive dynamics.
Smartphones have won the status of "commodity of everyday demand" and continue to cannibalize other related markets that fell before the crisis and continue to decline so far.
We expect that in 2017 the market of cell phones and smartphones will continue to recover: in quantitative terms its indicators will vary within the previous year figures or in the most insignificant positive increments.
Among the trends that are least affected by the economic factor, we can note the continuing growth in the popularity of smartphones with a diagonal display of more than 5 inches (phablets), as well as the increasing popularity of gadgets that support LTE.
Detailed results are presented in the full version of the report:
«The Russian mobile phone and smartphone market»
1. The Russian mobile phone and smartphone market, main indicators
1.1. Volume of the mobile phone and smartphone market, in physical and in monetary terms
1.1.1. Volume of the mobile terminals market in physical terms, 2014 - 2016. (In quarterly dynamics)
1.1.2. Volume of the mobile terminals market in monetary terms, 2014 - 2016. (In quarterly dynamics)
1.1.3. Sales structure of mobile terminals: smartphones and mobile phones, in physical terms, 2014 - 2016. (In quarterly dynamics)
1.1.4. Sales structure of mobile terminals: smartphones and mobile phones, in monetary terms, 2014 - 2016. (In quarterly dynamics)
1.2. The average retail price of a mobile terminal, the market structure by price segments
1.2.1. Quarter dynamics of the average retail price of a mobile terminal, 2014 -2016. (In quarterly dynamics)
1.2.2. Quarter dynamics of the average retail price of a smartphone, 2014 - 2016. (In quarterly dynamics)
1.2.3. Market structure of mobile terminals by price segments, % of sales in physical terms, 2014 - 2016. (In quarterly dynamics)
1.2.4. Structure of the smartphone market by price segments, % of sales in physical terms, 2014 - 2016. (In quarterly dynamics)
1.2.5. Structure of the mobile phone market by price segments, % of sales in physical terms, 2014 - 2016. (In quarterly dynamics)
2. The main manufacturers of mobile terminals
2.1. Dynamics of the mobile phone market structure by manufacturers, % of sales in physical terms, 2014 - 2016. (In quarterly dynamics)
2.2. Dynamics of the mobile phone market structure by manufacturers, % of sales in monetary terms, 2014 - 2016. (In quarterly dynamics)
2.3. Dynamics of the smartphone market structure by manufacturers,% of sales in physical terms, 2014 - 2016. (In quarterly dynamics)
2.4. Dynamics of the smartphone market structure by manufacturers,% of sales in monetary terms, 2014 - 2016. (In quarterly dynamics)
2.5. Brief profiles of the manufacturers
3. The average functionality of a smartphone in Russia, 2014 - 2016
3.1. Structure of the smartphone market by operating systems, % of sales in physical terms (in quarterly dynamics)
3.2. Structure of the smartphone market by operating systems, % of sales in monetary terms (in quarterly dynamics)
3.3. Support of two or more SIM cards
3.3.1. Structure of the smartphone market with support of two SIM-cards / without support of two SIM-cards in physical and in monetary terms
3.3.2. Structure of the smartphone market with support of two SIM-cards by manufacturers in physical terms
3.3.3. The average retail price of smartphones with support of two SIM-cards. The market structure for smartphones with support of two SIM-cards by price segments
3.4. LTE support
3.4.1. The market structure for smartphones with LTE / without LTE in physical and monetary terms
3.4.2. The market structure for smartphones with LTE by manufacturers in physical terms
3.4.3. The average retail price for an LTE smartphone. Market structure of the market for LTE-smartphones by price segments
3.5. NFC support
3.5.1. The market structure for smartphones with NFC / without NFC in physical and monetary terms
3.5.2. The market structure for smartphones with NFC by manufacturers in physical terms
3.5.3. The average retail price for an NFC smartphone. Market structure of the market for NFC-smartphones by price segments
3.6. The smartphone market structure by the display size
4. Forecasts and trends, 2017 - 2021
4.1. Forecast of the mobile terminals market in physical terms, 2017 - 2021
4.2. Forecast of the mobile terminals market in monetary terms, 2017 - 2021
4.3. Forecast of the share of smartphones sales in physical and monetary terms, 2017 - 2021
4.4. Forecast of the share of smartphones sales with different technologies, 2017 - 2021
4.4.2. NFC- module
5. Main conclusions
The newsletter was prepared by J'son & Partners Consulting. We make every effort to provide factual and forecast data that fully reflect the situation and are available at the time of the release of the material. J'son & Partners Consulting reserves the right to revise the data after the publication of new official information by individual players.
Copyright © 2017, J'son & Partners Consulting. The media can use the text, graphics and data contained in this market review, only using a link to the source of information - J'son & Partners Consulting or with an active link to the JSON.TV portal
™ J'son & Partners [registered trademark]
For more information, please contact:
Key account manager
+7 926 011 43 17
J'son & Partners Consulting
101990, MoscowArmenian Lane, 11/2 b. 1A
Tel.: +7 (495) 625-72-45