smartphone researchJust how long can smartphone shipments continue to grow at annual double-digit rates? At least until 2018, according to a new market research report from IDC. The Massachusetts-based market research provider forecasts worldwide smartphone shipments will grow at a compound annual rate (CAGR) of 12.3 percent from 2014-2018.

According to the latest update of IDC’s Worldwide Quarterly Mobile Phone Tracker, worldwide smartphone shipments will grow 23.1 percent year-over-year this year, reaching 1.2 billion units. Total volumes will continue growing and reach 1.8 billion units in 2018, IDC forecasts.

Commenting on the extraordinary growth, Ramon Llamas, research manager with IDC’s Mobile Phone team, stated, “What makes smartphone growth so amazing is where the growth will be taking place.

Global Smartphone Shipments
“Smartphone shipments will more than double between now and 2018 within key emerging markets, including India, Indonesia, and Russia. In addition, China will account for nearly a third of all smartphone shipments in 2018. These – and other markets – will offer multiple opportunities to vendors and carriers alike, but the key will be balancing affordability with expectations.”

IDC foresees the average selling price (ASP) for smartphones continuing on a downward trend. According to the market research provider, smartphone ASPs will fall 6.3 percent year over year in 2014 to $314. The decline will continue through 2018, when the smartphone ASP will reach $267.

Consumers’ expectations of quality will rise, even for cheaper smartphones, however, IDC says. “Until recently, low cost has equaled poor quality in the smartphone space,” Program Director with IDC’s Worldwide Quarterly Mobile Phone Tracker Ryan Reith commented.

“Given the competition at the high end, vendors like Motorola 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. This goes to show that components that were used 2-3 years back in high-end smartphones are still sufficient in many aspects, and ultimately will allow vendors to come to the table with viable low-cost solutions.”

OS Forecast
Turning from handsets to smartphone operating systems (OS) and providers, IDC expects Android “will undoubtedly remain the clear market leader…with share expected to hit 80.2 percent in 2014.” IDC forecasts growth in Android smartphone shipments will outpace the market this year, increasing 25.6 percent to fall just shy of 1 billion units.

Android, IDC continues, “will continue to be the platform driving low-cost devices.” ASPs for Android-based smartphones were “well below market average” in 1Q 2014, IDC notes, forecasting they will come in at $254 for 2014 and decline to $215 in 2018.

In contrast, IDC expects iOS’s share of smartphone shipments to fall from 14.8 percent in 2014 to 13.7 percent in 2018. Strong in mature markets, “where devices are heavily subsidized,” Apple iOS smartphone ASPs are high when compared to consumers’ target price in the emerging markets that will drive overall market growth, which is under $200, IDC points out.

IDC forecasts iOS smartphone shipment volumes will reach 184.1 million units in 2014 and grow to 247.4 million in 2018. This year’s 20 percent year-over-year growth rate will taper off to 6.1 percent in 2018, IDC expects.

Continuing “to slowly build its global footprint,” IDC forecasts growth in Windows Phone shipments, at 29.5 percent year over year, to outpace the market this year. With momentum continuing, volumes will reach 43.3 million units in 2015, when Windows Phone shipments will total 65.9 million units, and continue on through 2018, when they will reach 115.3 million.

Shipments of BlackBerry-based smartphones will continue to drop sharply, IDC forecasts, falling 49.6 percent in 2014, the equivalent of some 9.7 million units. Looking out to 2018, IDC expects BlackBerry OS smartphone shipments to continue to decline, falling to 4.6 million units in 2018.

With its market share plunging to below 1 percent this year, “the only way the company will be viable is likely through a niche approach based on its security assets,” IDC contends.

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