Technology | Media | Telecommunications

Thursday, December 05, 2013

Smartphone Shipments will Reach 1.7B Units in 2017

Worldwide smartphone shipments are expected to surpass 1.0 billion units in 2013, representing 39.3 percent growth over 2012, according to the latest global market study by International Data Corporation (IDC).

Despite a number of mature markets nearing smartphone saturation, the demand for low-cost computing in emerging markets continues to drive the smartphone market forward. By 2017, total smartphone shipments are expected to approach 1.7 billion units, resulting in a compound annual growth rate (CAGR) of 18.4 percent from 2013 to 2017.

A number of trends co-exist in the global smartphone market, but none have more of an affect on driving market growth than the steady decline in average selling prices (ASPs). Google Android has enabled a number of new manufacturers to enter the smartphone market supported by a variety of turnkey processing solutions.

Many of these handset vendors have focused on low-cost devices as a way to build brand awareness. In 2013, IDC expects smartphone ASPs to be $337, down -12.8 percent from $387 in 2012. This trend will continue in the years to come and IDC expects smartphone ASPs to gradually drop to $265 by 2017.

"The game has changed quite drastically due to the decline in smartphone ASPs," said Ryan Reith, program director at IDC. "Just a few years back the industry was talking about the next billion people to connect, and it was assumed the majority of these people would do so by way of the feature phone. Given the trajectory of ASPs, smartphones are now a very realistic option to connect those billion users."


The key driver behind smartphone volumes in the years ahead is the expected decrease in prices. Particularly within emerging markets, where price sensitivity and elasticity are so important, prices will come down for smartphones to move beyond the urban elite and into the hands of mass market users.

IDC believes that every vendor is closely eyeing how far down they can price their devices while still realizing a profit and offering a robust smartphone experience.

From a volume perspective, emerging markets including Asia-Pacific, Latin America, and Middle East and Africa (MEA) will all post market-beating growth rates from 2013 to 2017. Asia-Pacific will also experience some market share growth from 2013 to 2017.

Developed markets, by contrast, will see market share erosion, but will nonetheless see volume increases during the same time period. All combined, the worldwide smartphone market is poised for certain growth.

Similarly, from a price perspective, ASPs in these same emerging markets will post single-digit CAGR declines from 2013 to 2017, led by Asia-Pacific. This will enable more users to afford smartphones for the first time, and in many cases, allow users to bypass purchasing feature phones altogether and go straight to smartphones.