Emerging Markets Seen Boosting Smartphone Shipment Growth to 2.8 Billion Over Next Four Years

Worldwide smartphone shipments will reach 1.2 billion units this year, up 23 percent from last year, and reach 1.8 billion units by 2018, said IDC. The industry research firm, in a report (http://bit.ly/1ko36sY), forecast a compound annual growth rate from 2013-2018 of 12.3 percent, driven by a doubling of shipments in emerging markets including India, Indonesia and Russia. China will account for nearly a third of all smartphone shipments in 2018, IDC said.

A key to reaching the growth opportunity is “balancing affordability with expectations,” said Ramon Llamas, research manager-IDC mobile phone team. IDC projects the average selling price (ASP) of smartphones to be $314 this year, down 6.3 percent from 2013, and ASP is expected to drop to $267 by 2018. Consumers will expect premium features regardless of falling prices, Llamas said.

"Until recently, low cost has equaled poor quality in the smartphone space,” said Ryan Reith, program director-IDC’s Worldwide Quarterly Mobile Phone Tracker. In the competitive high-end segment, vendors including Motorola Mobility “are trying to skate to where the puck is going by offering extremely affordable devices like the Moto E, which offer a ‘good enough’ experience that will suit the needs of many,” Reith said. Components used in high-end smartphone designs from two to three years earlier “are still sufficient in many aspects,” Reith said, allowing vendors to offer lower-cost solutions.

Among operating systems, Android will remain dominant, with market share of 80.2 percent this year, IDC said. Over the forecast period, Android will lose minimal share to Windows Phone, it said. Android will continue to be the platform driving lower-cost devices, with the ASP for Android smartphones expected to be $254 for 2014, then falling to $215 in 2018. Falling prices are expected to expand unit sales by 25 percent with volume approaching 1 billion units by 2018, IDC said.

IDC expects share of iOS smartphones to slip from 14.8 in 2014 to 13.7 by the end of the forecast period. Apple continues to be strong in mature markets, where devices are heavily subsidized, but it could face headwinds in emerging markets where the “appetite for smartphones” is at the sub-$200 level, far below Apple’s current selling prices, IDC said. Shipments of iOS smartphones are expected to hit 184.1 million this year and expand to 247.4 million in 2018, it said. Apple’s 20 percent smartphone growth this year is forecast to ebb over the next several years before reaching 6 percent in 2018, which IDC called “more in line with overall market growth."

Windows Phone is slowly building a global footprint, and its growth is expected to outpace the market through the forecast period, IDC said. Windows Phone volume is expected to grow 29 percent year over year in 2014, reaching 43.3 million shipments, IDC said. Volume is forecast to be 65.9 million units in 2015 and 115.3 million in 2018. IDC cited uncertainty over Microsoft’s plans following its acquisition of much of Nokia but said “an additional positive is the number of new OEM partners recently announced.” Microsoft announced new features at its Build conference this year which could bring more OEMs to the platform, IDC said. If device portfolios “continue to scale the cost spectrum,” Windows Phone can continue to gain momentum, it said.

BlackBerry smartphone volume is forecast to plummet 47 percent this year, to some 9.7 million units, IDC said. Declines will continue to 4.6 million in 2018, it said. The question of BlackBerry’s survival continues, and market share is expected to dip below 1 percent this year. The company’s primary hope for viability is “through a niche approach based on its security assets,” IDC said.