Smartphone shipment volume shot up over 39% in 2013, exceeding 1 billion units for the first time. That pace won’t be kept up in years to come, however, with smartphone shipment growth slowing to 8.3% in 2017 and 6.2% in 2018, according to the latest forecast from IDC.
2014 will mark an inflection point, and downturn, in growth rate, according to IDC’s Worldwide Quarterly Mobile Phone Tracker. IDC forecasts growth in leading markets including North America and Europe will drop to single digits, with Japan “contracting slightly.”
IDC expects high growth rates in emerging markets, which will lift 2014 growth in worldwide smartphone shipments to 19.3%, or 1.2 billion units, up from 2013′s 1 billion.
“In North America we see more than 200 million smartphones in active use, not to mention the number of feature phones still being used,” IDC Worldwide Quarterly Mobile Phone Tracker program director Ryan Reith was quoted in a press release.
“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.”
The slowdown will drive manufacturers to lower price points quickly as they seek to unload product. That will make for a challenging business environment, IDC says. The worldwide Average Selling Price (ASP) for smartphones was $335 in 2013. that will drop to $260 this year.
“In order to reach the untapped demand within emerging markets, carriers and OEMs will need to work together to bring prices down,” IDC Mobile Phone team research manager Ramon Llamas commented. “Last year we saw a total of 322.5 million smartphone units ship for under $150 and that number will continue to grow going forward.
“We’ve already seen numerous smartphone announcements targeting this price band this year, with some as low as $25. Just as the dynamics have changed for overall smartphone growth, so have the dynamics for smartphone pricing in the markets where continued growth is expected. Not all vendors will want to get into this space, but those that do must make deliberate choices about their strategies in order to succeed.”
Android will continue to be the most widely used smartphone operating system (OS) throughout the forecast period, “with a strong presence in emerging markets and attainable price points for both vendors and customers,” according to IDC.
iOS will continue as the world’s #2 smartphone OS, maintaining the highest ASPs among all platforms.
IDC analysts see Windows Phone as having the greatest growth potential among leading vendors. Continued support from Nokia and the addition of new vendor partners, with most from emerging markets, could drive growth, they say.
BlackBerry will continue to come under attack from competitors, and while it is making efforts to bolster its presence among key government and enterprise users, its high prices could constrain growth, IDC adds.