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Evolving Role of Smartphone Developer Ecosystems

Independent software developers closely monitor the trends for smartphone shipments. Developers flock to the most vibrant ecosystem -- with the greatest market potential. In contrast, they tend to shun the niche mobile device operating systems, such as Microsoft Windows Phone.

Besides, as more markets across the globe become saturated with smartphones and growth slows, the ongoing upside opportunities will continue to move towards software applications. That's one reason why Google Android will maintain its leadership position over time. Just like the growth trajectory for Enterprise Linux, the open source movement will have a bright future in the mobile sector.

According to the latest market study by International Data Corporation (IDC), worldwide smartphone shipments will reach a total of nearly 1.3 billion units in 2014, representing an increase of 26.3 percent over 2013.

IDC forecasts 1.4 billion smartphones to be shipped worldwide in 2015, for a 12.2 percent year-over-year growth rate. Slower annual growth continues throughout the forecast with unit shipments approaching 1.9 billion units in 2018, resulting in a 9.8 percent compound annual growth rate (CAGR) for the 2014–2018 forecast period.

"The impact of upstart Chinese players in the global market will be reflected in a race to the bottom when it comes to price. While premium phones aren't going anywhere, we are seeing increasingly better specs in more affordable smartphones," said Melissa Chau, senior research manager at IDC.

IDC believes that consumers no longer have to go with a top-of-the-line handset to guarantee decent hardware quality or experience. As more consumers focus on overall smartphone value, which is the next handset vendor to be negatively impacted? Recently, it would appear that Samsung has taken the brunt of the value-centric trend.

On a worldwide basis, IDC forecasts that smartphones are expected to have an average selling price (ASP) of $297 worldwide in 2014, dropping to $241 by 2018. Emerging markets like India will see much lower smartphone prices, as ASPs hit $135 in 2014 and fall to $102 by 2018.

In contrast, ASPs in mature markets are not expected to change significantly and modestly higher shipment volumes will not drive up overall revenues as each generation of flagship phones shows less and less differentiation from its predecessors. At least, that's the current view.

From an operating system perspective, Android devices will continue to drive shipment volumes while iOS devices drive revenues. By 2018, Google Android will control 80 percent of global smartphones shipped and 61 percent of revenues, while Apple iOS will control only 13 percent of volumes and 34 percent of revenues.

With Android volumes so dominant, it is no longer a possibility for new operating systems like Tizen and Firefox to compete on price alone – IDC says that an underdog mobile OS must bring a radically different appeal to gain any significant traction. Furthermore, will Apple iOS become the next ecosystem to experience a loss of software developers? Only time will tell.

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