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Smartphone market set for slowest ever growth

The smartphone market is set for its slowest ever year of growth, according to new figures on Thursday, while overall shipments for wearable technology continues to soar.

Worldwide smartphone shipments will hit 1.43 billion units in 2015, a year-on-year growth of 9.8 percent, the first full-year of single-digit growth on record, according to data from the International Data Corporation (IDC).

Google's Android mobile operating system (OS) is expected to have a 81.2 percent market share this year, growing 9.5 percent from the year before. Apple's iOS is forecast to own 15.8 percent of the market, with shipments growing 17.3 percent year-on-year, while Windows Phone will have just 2.2 percent market share, a 10.2 percent decline.

The weaker growth has mainly been due to an economic slowdown in China as well as the world's second-largest economy becoming a replacement market – where users generally refrain from buying brand new products. Shipment growth in China is only forecast to be in the low single digits, IDC said.

As shipments slow across many markets, IDC said consumers will be enticed by affordable high-value handsets and attractive financing options on pricier models.

"Vendors will look to push device financing and trade-in options across many of the developed markets as growth in these markets is expected to primarily come from replacement purchases and second devices," Anthony Scarsella , research manager with IDC's mobile phones team said in a statement.

"Apple has taken the lead with its iPhone Upgrade Program, and several other vendors are expected to implement similar plans in the months ahead. These plans could represent the most effective way to get flagship devices into the hands of consumers while speeding up the upgrade cycle through trade-in and incentives."



Xiaomi 800% wearable growth

An Android sculpture stands in the lobby of Google I/O last June.
Harriet Taylor | CNBC
An Android sculpture stands in the lobby of Google I/O last June.

While the smartphone market slows, the nascent wearable market grew nearly 200 percent year-on-year in the third quarter, according to IDC. Total shipment volume for the quarter came to 21.0 million units, up from the 7.1 million units during the same period last year.

The Apple Watch debuted in IDC's research last quarter as the second biggest wearable with a 18.6 percent market share. But Fitbit remains number one with a 22.2 percent market share.

Notably, the Chinese players have been making a big splash. Xiaomi is closing in on Apple with a 17.4 percent market share. With its Mi Band range of products, the Chinese company saw total shipments grow 815.4 percent year-on-year in the third quarter.

Meanwhile, Samsung has been knocked out of the top five ranking by BBK, the owner of XTC, a company which makes a children's phone watch. Still, Chinese players could have a tough time expanding out of their domestic market.

"China has quickly emerged as the fastest-growing wearables market, attracting companies eager to compete on price and feature sets. In addition, multiple vendors have experimented with a broad range of products and applications," IDC noted.

"The challenge, however, is whether these vendors can expand their presence, as few have extended beyond the country's borders and into other markets."