From the very first time of buying android smartphones, we see those colors which are less realistic. Only few percentage of people change it by going deep level down inside settings.
Why it is set so vibrant?
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Because smartphones are used outdoors...
I suspect it is mostly fashion and showing off, as Koen Lageveen suggests here. However, there is a potential usability benefit. Smartphones are more likely to be used outdoors in bright ambient light. Bright ambient light tends to wash out colors, all other things being equal. If the color saturation were lower, images would appear duller and possibly even harder to recognize. If color coding is used, color differences would be harder to distinguish.
...but that's becoming less of an issue...
Today, most smartphones have programmably accessible ambient light sensors, opening the possibility for an app to dynamically adjust color saturation so that colors are distinct in high ambient light, but not so jarring in normal and low light. See:
Yu J, Zhao J, Chen Y, Yang J, 2015 Sensing Ambient Light for User Experience-Oriented Color Scheme Adaptation on Smartphone Displays. Proceedings of the 13th ACM Conference on Embedded Networked Sensor Systems, 309-321.
...so, get ready for a backlash.
Technology fashion seems to be driven by a combination of reacting against the previous fashion while showing off current technical capacities. Remember 3-D? Transparency and reflections? Skeuomorphism? Therefore, I predict the next fashion will be dynamically adjusted color schemes that are consistently “Quiet” or “Serene.” Be the first.
Seeing that bright and colourful display and might cause you to think "wow this is a great phone I'm going to buy it". That experience and the moment of purchase is actually a pretty strong part of the user experience of owning something and very important aspect of the customer journey.
Also, properly calibrated colours are usually a bit dull. If you don't care about accuracy (e.g. you're not colour correcting photo's for print) there is something to be said about pumping it up a bit.