It may be a saturated market but consumers continue to fuel an upgrade cycle with smart phone sales set to continue booming into the second half of the year.

That’s the finding of a new study by emerging technology analyst firm Telsyte.

New findings from the “Telsyte Australian Smartphone & Wearable Devices Market Study 2017-2021″ show 4.4 million smartphones were sold during 1H 2017, up 16 per cent compared to H1 2016.

Android smartphones held market leadership (55 per cent share) with the top three Android vendors being Samsung, Huawei and Oppo.

Telsyte believes Apple will emerge as market leader in the second half of 2017, when it is expected to expedite the release of an 8th edition iPhone to feature alongside the iPhone 7S & iPhone 7S Plus.

“The arrival of at least three new iPhones, as well as the long-held strategy of keeping older models available at lower prices, will help Apple target its loyal customer base,” Telsyte Managing Director Foad Fadaghi said.

Telsyte estimates around 4.7 million smartphones will be sold in 2H 2017, a result that could see Apple beat 2014 sales when it first released the larger format iPhone 6.

Telsyte believes a number of factors will drive iPhone sales including:

  • Almost 1 million active iPhones in Australia will not receive the latest iOS 11 update made available in September 2017, leaving models older than the iPhone 5s unsupported.
  • The iPhone repeat purchase intention in Australia as measured by Telsyte is at an all-time high: 93 per cent, compared to the second highest, Samsung with 74 per cent.
  • Aging handsets are creating pent-up demand, with nearly 1 in 4 iPhone users using an iPhone that is 3 years or older.
  • Aggressive marketing and larger data cap offers by mobile service providers. Telsyte estimates up to 65 per cent of iPhone sales in 2H 2017 will be via mobile contracts, compared to around 50 per cent in previous iPhone “S” model years.
  • The inclusion of substantial new features in the field of Augmented Reality (AR) and AI capabilities that will attract upgraders.

Augmented Reality the next smartphone battleground

Telsyte research found that 1 in 3 Australian smartphone users have tried “AR-like” features on their smartphones which includes the popular mobile game Pokémon Go as well as Snapchat and Facebook photo filters.

Telsyte believes these two categories (games and social) will be the most popular initially for AR, with navigation, education, shopping/retail and communications all likely to get early interest from app developers.

“The release of Apple’s ARKit and Google’s ARCore is expected to support more advanced AR applications, driving awareness and usage which could rapidly expand in 2018,” Telsyte senior analyst Alvin Lee said.

Telsyte estimates more than half of iPhones in Australia are current capable of supporting Apple’s current ARKit, compared to less than 10 per cent of Android smartphones for recently announced Google’s ARCore. But more Android models are expected to gain support in coming months, adding to the ongoing battle for smartphone supremacy.

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