IHS Predicts 77% Global Penetration of Smartphones in 2020, Up From 53% in 2016
February 20, 2017
IHS boldly forecasted that the global smartphone installed base would grow from four billion in 2016 to more than six billion smartphones in use by 2020. Messaging and communications apps such as Line and Whatsapp will grow from five billion users in 2016 to 7.5 billion by 2020. The current world population according to the UN is ~7.515b, so the current penetration of smartphones is 53%. By 2020, the UN forecast the population to reach 7.758b people and therefore IHS projects smartphone penetration to 77%, a very unrealistic penetration rate, given that the urban population will only grow from 4.1b in 2017 to 4.3b in 2020. It is likely that penetration would be more likely to follow the growth in the urban population than the growth in total population so that the rate of penetration is more likely to up 5% than 24%.
IHS further justifies its conclusions by proclaiming that global consumer spending on mobile apps will reach $74 billion by 2020 up from 37% from $54 billion in 2016. Africa, the Middle East and Latin America are projected as the fastest-growing regions for mobile app spend. Africa and the Middle East will grow at an average rate of 18 percent each year to 2020. “Latin America will see an average growth rate of 23% compared with the global 8% average annual rate,” said Jack Kent, Director at IHS Technology. “Africa, the Middle East and Latin America will be the fastest- growing regions in the next four years. ”There were more than 120 million active mobile money accounts in emerging markets in 2016, according to the IHS Technology analysis. The number of addressable smartphones for device based payment services will increase from 2.7b in 2016 to more than 5b by 2020. “Mobile payments and commerce are central to mobile innovation and will be critical for future growth,” Kent said. “Mobile money services have been a vital tool for financial inclusion in emerging markets, but elsewhere, mobile money services are looking to complement or disrupt traditional payments and financial services through the launch of app-only banking services, device-based payments from services such as Apple Pay, Android Pay and Samsung Pay, and payment integration via social media and messaging apps.”
Even if the use of mobile apps grow as projected, the poor lower classes and the slow growth of the urban population should constrain the wild growth estimates proposed by IHS Technology.