Quantcast
Tuesday / August 20.
HomeWhat's OnSmartphone Sales: From Boil to Simmer

Smartphone Sales: From Boil to Simmer

When it comes to smartphone sales, the growth is still there — but it’s slowing. Smartphone sales growth will continue at nearly 10 percent each year through 2018, well off the pace of recent years, according to a new mobile phone forecast from International Data Corp. (IDC).

Worldwide smartphone shipments will reach a total of nearly 1.3 billion units in 2014, an increase of 26.3 percent over last year, according to IDC’s Worldwide Quarterly Mobile Phone Tracker.

Looking ahead, though, IDC expects 1.4 billion smartphones to be shipped worldwide in 2015 — only a 12.2 percent year-over-year growth rate. Slower annual growth is predicted throughout the forecast period, with unit shipments nearing 1.9 billion units in 2018, a 9.8 percent compound annual growth rate (CAGR) for the 2014-18 forecast period.

Revenues To Fall

While sales are forecast to lag, the real change will come in smartphone revenues. Revenues will see only a 4.2 percent CAGR over the same forecast period, thanks in part to highly competitive international pricing, according to IDC.

“The impact of upstart Chinese players in the global market will be reflected in a race to the bottom when it comes to price,” said Melissa Chau, senior research manager with IDC’s Worldwide Quarterly Mobile Phone Tracker. “While premium phones aren’t going anywhere, we are seeing increasingly better specs in more affordable smartphones. Consumers no longer have to go with a top-of-the-line handset to guarantee decent hardware quality or experience.”

That hit on revenue will be reflected in lower prices. On a worldwide basis, smartphones are expected to have an average selling price of $297 worldwide in 2014, dropping to $241 by 2018.

Meanwhile, in emerging markets such as India, prices are forecast to be much lower: $135 in 2014 and $102 by 2018. Prices in mature markets, however, are not expected to change much, although marginally higher shipment volumes will not drive up overall revenues. Why? Each generation of flagship phones is less distinctive than the last, according to IDC.

Android, iOS Domination

When it comes to smartphone operating systems, Android and iOS will continue to steer the market. By 2018, Android will control 80 percent of global smartphones shipped and 61 percent of revenues, while iOS will control only 13 percent of volumes but 34 percent of revenues.

With Android in the driver’s seat when it comes to volumes, IDC speculated that it would be impossible for a new operating system, such as Tizen or Firefox, to compete on price alone. It will take a drastically different appeal for any upstart OS to gain a market foothold.

As shipment volume slows, more attention to shift toward value trends, said Ramon Llamas, Research Manager with IDC’s Mobile Phones team. “Apple’s approach with premium pricing ensures a growing portion of overall revenues despite its declining market share,” he said. “Meanwhile, Android’s multi-faceted approach — with forked versions and low-cost Android One strategy — will produce mixed results, yet it allows deeper penetration into emerging markets.”

This entry passed through the Full-Text RSS service – if this is your content and you’re reading it on someone else’s site, please read the FAQ at fivefilters.org/content-only/faq.php#publishers.