Earlier this year Gartner predicted that 82% of mobile phones around the world would be smartphones by the end of 2016.

New research from CCS Insight backs that prediction up but shows that global mobile phone shipments are on the decline.

All told, the mobile phone market is expected to fall 1.3% in 2016 when compared to 2015 but smartphones shipments will climb 4.1%.

So while there are less mobiles being shipped, more of those shipments contain smartphones.

It’s not all good news however. Director of forecasting at CCS Insight, Marina Koytcheva said that as growth of shipments falls, smaller manufacturers might find it harder to stay competitive. “Competition is intensifying and it comes as little surprise that margins are being squeezed harder than ever,” Koytcheva said.

This is made harder by the fact that component prices have climbed in the second semester of this year. A report by Mobile World Live suggests the price hikes stem from shortages of screens, camera modules and memory.

This is the first time that component prices have climbed in years according to Koytcheva. “Phone makers with low volumes will find it almost impossible to turn a profit in these conditions without raising the prices of their products,” explained the director.

This is bad news for manufacturers Xiaomi who will likely struggle to offer a phone that beats smartphones twice its price.

For manufacturers such as Huawei though, being able to exploit its scale to offset the more expensive components might be the secret weapon it needs to wrest more market share from smaller manufacturers.

It’s likely that we only start to see the impact of this a bit later in the year, or even early next year but if you can’t find a smartphone for under R3 000 next year, this might be why.

[Via – Mobile World Live][Image – CC BY/2.0 TheHilaryClark]