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Wednesday, February 26, 2014
Smartphone Growth Expected to Slow by 2017


Worldwide smartphone shipments will slow to 8.3% annual growth in 2017 and 6.2% in 2018, with Android OS to keep its lead over iOS, International Data Corporation (IDC) estimates.

Annual smartphone volume in 2013 surpassed 1 billion units for the first time, accounting for 39.2% growth over 2012. But in the coming year, IDC expects mature markets like North America and Europe 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. IDC expects 2014 volumes to be 1.2 billion, up from 1 billion in 2013, representing 19.3% year-over-year growth.

"In North America we see more than 200 million smartphones in active use, not to mention the number of feature phones still being used," said Ryan Reith, Program Director with IDC's Worldwide Quarterly Mobile Phone Tracker. "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 mature markets become saturated and worldwide growth slows, service providers and device manufacturers are seeking opportunities 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 $335 in 2013, and is expected to drop to $260 by 2018.

IDC estimates that Android will maintain its reign as the leading operating system. With a strong presence within emerging markets and attainable price points for both vendors and customers, IDC expects both a commanding market share as well as prices below the industry average. What remains to be seen is which vendors will win the contest within emerging markets, as many local vendors have gained share last year.

iOS will remain the number 2 platform behind Android and will have the highest ASPs among the leading platforms. Apple has maintained a tight focus on the high end of the market with its most current devices, a trend we expect to see continue into the future. This could keep iOS from realizing greater volumes within emerging markets, but sales in mature markets will offset much of the difference.

Windows Phone stands to grow the fastest among the leading smartphone operating systems, with continued support from Nokia as well as the addition of nine new Windows Phone partners. Most of these new vendors come from emerging markets and could help bring the Windows Phone experience to customers there.

IDC has taken a conservative stance on BlackBerry's future. The company's recent moves to shore up its presence with government and enterprise users as well as its strongholds within emerging markets will be under constant attack from the competition. However, its higher-than-average prices compared to other platforms could inhibit its growth potential.


Worldwide Smartphone Forecast by OS, Shipments, and Market Share, 2014-2018 (Units in Millions)

Operating System

2014 Shipment Volumes*

2014 Market Share

2018 Shipment Volumes*

2018 Market Share

2014-2018 CAGR

Android

950.5

78.9%

1,321.1

76.0%

10.7%

iOS

179.9

14.9%

249.6

14.4%

10.2%

Windows Phone

47.0

3.9%

121.8

7.0%

29.5%

BlackBerry

11.9

1.0%

5.3

0.3%

-22.6%

Others

15.1

1.3%

40.7

2.3%

32.7%

Total

1,204.4

100.0%

1,738.5

100.0%

11.5%

 

Worldwide Smartphone Average Selling Price (ASP) by Region and 5-Year CAGR (ASPs in $USD)

Operating System

2014 Smartphone ASP*

2018 Smartphone ASP*

2014-2018 CAGR

Android

$247

$202

-6.1%

iOS

$649

$610

-1.2%

Windows Phone

$265

$195

-8.3%

BlackBerry

$339

$324

-3.8%

Others

$154

$173

1.4%

Total

$308

$260

-5.0%


* represents forecast data

Source: IDC Worldwide Mobile Phone Tracker, February 26, 2014



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