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Monday, March 04, 2013
Smartphones Said To Outship Feature Phones for First Time


International Data Corporation (IDC) analysts forecast that more smartphones than feature phones will be shipped globally in 2013, the first such occurrence in the mobile phone market on an annual basis.

IDC expects vendors to ship 918.6 million smartphones this year, or 50.1% of the total mobile phone shipments worldwide.

Smartphone prices have fallen globally, the smartphone strata are wider than ever, and the roll-out of data-centric fourth-generation (4G) wireless networks are three factors that have made these "do-it-all" devices an increasingly attractive option for users. By the end of 2017, IDC forecasts 1.5 billion smartphones will be shipped worldwide, which equates to just over two-thirds of the total mobile phone forecast for the year due to these primary factors.

To date, much of the world's smartphone shipments were a direct result of demand in mature economies such as the U.S. The balance of smartphone demand is gradually shifting, however, to emerging markets where smartphone user bases are still relatively small and economic prospects are considerably higher. Smartphone shipments to China, Brazil, and India will comprise a growing percentage of the device type's volume in each forecast year. Smartphone demand is burgeoning in these large, populous nations as their respective economies have grown; this has made for a larger middle class that is prepared to buy smartphones. China, which supplanted the U.S. last year as the global leader in smartphone shipments, is at the forefront of this shift.

"While we don't expect China's smartphone growth to maintain the pace of a runaway train as it has over the last two years, there continue to be big drivers to keep the market growing as it leads the way to ever-lower smartphone prices and the country's transition to 4G networks is only just beginning," said Melissa Chau, Senior Research Manager, IDC Asia/Pacific. "Even as China starts to mature, there remains enormous untapped potential in other emerging markets like India, where we expect less than half of all phones shipped there to be smartphones by 2017, and yet it will weigh in as the world's third largest market."

Brazil is another market where smartphone growth will remain high over the course of the forecast as its economic fortunes improve. "Brazilians have yet to turn in their feature phones for smartphones on a wholesale basis," said Bruno Freitas, Consumer Devices Research Manager, IDC Brazil. "The smartphone tide is turning in Brazil though, as wireless service providers and the government have laid the groundwork for a strong smartphone foundation that mobile phone manufacturers can build upon."

China is expcted to remain the world's largest market for smartphones, specifically low-cost handsets based on the Android operating system and to a lesser degree iOS. While shipment volume to the country will remain at the top, growth will slow towards the end of the forecast period. Also, smartphone prices are expected to fall amid increased competition. Consequently, China's share of the global smartphone market will be diluted somewhat as more smartphones are shipped to India, Brazil, and other emerging markets.

Now that smartphone users constitute the majority of all mobile phone users in the United States, IDC expects slower growth in the years ahead. Underpinning its growth is the constantly shifting operating system landscape, in which resurgent BlackBerry and Windows Phone aim to gain salience against incumbents Android and Apple iOS.

India's year-over-year smartphone shipment growth will be the highest among the top countries by a wide margin as the vast majority of the country's wireless subscriber base currently use feature phones. The smartphone market will grow due to a variety of factors including greater availability of low-cost devices and additional sales emphasis by top-flight vendors on less populous parts of the country. In addition, 3G network coverage will continue to expand while 4G networks are expected to stimulate smartphone growth from 2015 onwards.

Brazil's smartphone market rise is driven by a confluence of circumstances, such as tax breaks for vendors that create jobs via local mobile phone production. Wireless service providers are offering greater subsidies to drive smartphone sales with an eye on higher data revenue streams in the future. The successful rollout of Long-Term Evolution (LTE) networks in Brazil is key to the country's smartphone market growth.

Growth of the United Kingdom smartphone market has slowed considerably in recent quarters as penetration has risen and economic growth remains minimal at best, which has led to consumer trepidation. The size of the market and its wealth relative to much of Western Europe will make it a smartphone volume leader over the forecast given the ongoing transition to LTE networks and continued high carrier subsidies.


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