Here’s Why More Phones Were Sold In 2015 With Less Profit Made

Here’s Why More Phones Were Sold In 2015 With Less Profit Made

It is a fact that more phones were actually shipped in 2015 than previous years but surprisingly, that didn’t result in higher profits. The last few years in the global market has been quite interesting and we did see some crazy trends. More OEMs enter the playing field with different ideas, heating up the competition, all to the benefit of consumers. Just a few days ago, a top Xiaomi executive confessed that the competition is the market is insane.

Image credit: Jon Fingas / Flickr

Chinese brands made sure the low-end and mid-rage markets become saturated with all kinds of devices. 2015 broke the record in the history of global mobile market with 368 million devices shipped. This is an increase of 6% compared to 2014 but despite this, there was a drop in revenue.

With the 6% increase in smartphones sold, one might expect a jump in revenue but there was actually a drop. Revenue from sales amounted to $115.2 billion which is 0.2% lower than the revenue from 2014 sales.

There can only be one explanation to this and it isn’t far-fetched. Smartphones got cheaper, a lot cheaper than what they used to be. You don’t have to pay a fortune to get a smartphone any longer as the market is now filled with awesome mid-range devices with specifications seen in the high-end market. Most OEMs — especially Chinese manufacturers — target the low-end and mid-range market and some of these brands have successfully hijacked some regions from the likes of Samsung.

Yes, people bought more phones in 2015, but at much cheaper rates. The market is changing and more people are realizing even the cheaper alternatives work. Even premium brands are changing their strategy trying to cope with the situation.

There’s a chance this trend will continue even in 2016. Phones will get cheaper and new entries will keep entering the market, beating down the price even further.