Global smartphone growth to slow to single digits – prices to tumble

26 Feb 2014

While annual smartphone volume in 2013 surpassed 1bn phones for the first time, accounting for 39.2pc growth over 2012, worldwide smartphone shipments will slow to 8.3pc annual growth in 2017 and 6.2pc in 2018, IDC predicts.

In the coming year, IDC expects mature markets like Europe and North America to drop to single digits, and Japan might contract slightly.

Despite the high growth expected in many emerging markets, 2014 will mark the year smartphone growth drops more significantly than ever before. This year, volumes are expected to be 1.2bn, up from 1bn in 2013, representing 19.3pc year-over-year growth.

“In North America, we see more than 200m smartphones in active use, not to mention the number of feature phones still being used,” said Ryan Reith, programme director with IDC’s Worldwide Quarterly Mobile Phone Tracker. “(The year) 2014 will be an enormous transition year for the smartphone market. Not only will growth decline more than ever before, but the driving forces behind smartphone adoption are changing. New markets for growth bring different rules to play by and ‘premium’ will not be a major factor in the regions driving overall market growth.”

As a result, manufacturers will attempt to move hardware wherever they can.

The result is rapidly declining price points, creating challenging environments in which to turn a profit.

Worldwide smartphone average selling price (ASP) was US$335 in 2013, and is expected to drop to US$260 by 2018.

Battle of the mobile operating systems

idc smartphones 2013

In the year ahead, Android will remain the No 1 OS globally, with iOS in No 2 position.

However, Windows Phone stands to grow the fastest among the leading smartphone operating systems, thanks to continued support from Nokia.

IDC has a bleak outlook for BlackBerry’s future, pointing out that its higher-than-average prices compared to other platforms could inhibit its growth potential.

“In order to reach the untapped demand within emerging markets, carriers and OEMs will need to work together to bring prices down,” said Ramon Llamas, research manager with IDC’s Mobile Phone team.

“Last year, we saw a total of 322.5m smartphone units ship for under US$150 and that number will continue to grow going forward. We’ve already seen numerous smartphone announcements targeting this priceband this year, with some as low as US$25.

“Just as the dynamics have changed for overall smartphone growth, so have the dynamics for smartphone pricing in the markets where continued growth is expected. Not all vendors will want to get into this space, but those that do must make deliberate choices about their strategies in order to succeed,” Llamas said.

Smartphone user via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years