Emerging markets and lower price drive smartphone sales

by CXOtoday News Desk    Jun 06, 2013

smartphone sales

Lower costs of handsets and increased adoption in the emerging markets will push worldwide smartphone shipments close to the billion-unit level by end of 2013, according to a new forecast from IDC. The research firm predicts smartphone shipments to grow 32.7 per cent year over year in 2013 reaching 958.8 million units, up from 722.5 million units last year. Emerging markets will account for 64.8 per cent of all smartphones shipped during 2013, which is up from 43.1 per cent in 2010.

Ryan Reith, Program Manager for IDC’s Mobility Trackers states that smartphones have become increasingly common in emerging markets and it is often the first affordable means of computing for these markets. These are markets where average personal income is far less than in developed markets, and therefore vendors have been forced to create smartphone computing experiences for the low end of the market. “At a time when the global smartphone market is growing at 33 per cent year over year, average selling prices have plummeted, dropping -8 per cent in 2012 with another -9 per cent expected this year,” he said.

According to Reith, one way in which vendors have managed to keep costs down is by continuing to produce 3G smartphones alongside faster 4G smartphones. Using older radio components has proven to be an easy cost-cutting measure for handset OEMs in the smartphone space. 3G-enabled smartphones will account for 70.9 per cent of all smartphones shipped in 2013, and 50.1 per cent of smartphones shipped in 2017. This is a clear indication that a “good enough” computing experience is suitable for many, especially when it comes to cost trade-offs.

At a time when the global smartphone market is growing at 33 per cent year over year, average selling prices have plummeted, dropping -8 per cent in 2012 with another -9 per cent expected this year.
-Ryan Reith, Program Manager for IDC’s Mobility Trackers

Another report from Gartner last month also predicts that the number of smartphones shipped worldwide will reach one billion this year as the device becomes more affordable, driving adoption in emerging markets and the prepay segment in mature markets.

Last year, 675 million smartphone units were shipped. Carolina Milanesi, research vice president at Gartner points out that these numbers indicate how quickly smartphones have been embraced by consumers, with the first mass market smartphone having been introduced just six years ago in 2007 by Apple. In addition, user behavior has switched from simple voice telephony to data consumption and creation, and the smartphone has become the ideal tool for users.

With the rise in global smartphone shipments, demand has quickly spread from developed markets to emerging markets, with analysts pinning high hopes on countries such as India, China, Philippines and Brazil.

2013 will mark the first year that smartphone shipments surpass those of feature phones, with smartphones expected to account for 52.2 per cent of all mobile phone shipments worldwide. This trend will continue for years to come as demand for mobile data and handheld computing spreads across both developed and emerging markets.

“This will be a watershed year for smartphones,” said Ramon Llamas, Research Manager for IDC’s Mobile Phones program. “If you look at the number of vendors who support both feature phones and smartphones, many of them have not only successfully transitioned their product portfolios to highlight smartphones, but smartphones have become their primary value proposition going forward. In some cases, smartphones have accounted for well over 50 per cent of their quarterly shipment volume. Looking ahead, we expect the gulf between smartphones and features phones to grow ever wider,” he said.