Emerging Markets Take Smartphone Slack

Smartphone shipments are expected to rise 23.8% YoY in 2014, according to IDC, to more than 1.25 billion units, from 1.01 billion in 2013. A 12.7% CAGR will lead to 1.8 billion shipments in 2018.

Since 2011, emerging markets have represented more than 50% of annual smartphone shipments. However, until last year mature markets have also delivered double-digit growth. In 2014, IDC expects mature market growth to slow to 4.9% YoY, while emerging regions will climb to 32.4%.

Ramon Llamas, research manager, said, “The smartphone market…is starting to slow. Mature markets have slowed considerably but still deliver strong revenues with average selling prices (ASPs) over $400. Meanwhile, many emerging markets are still barrelling along, but with ASPs of less than $250”. It is now key for vendors to maintain a presence in the high-margin mature markets, while establishing themselves in emerging markets. Operating system companies are partnering with OEMs to provide low-cost handsets as part of this strategy.

920.8 million smartphones – 73.5% of the overall market – will be shipped to emerging countries this year. By 2018, IDC believes that volume in these regions will grow to 1.4 billion: 79.5% of the global market.

88.4% of emerging markets’ smartphone shipments this year will be Android devices. The platform’s lack of constraints around hardware and specifications has helped to push it as the world’s smartphone OS of choice. Many low-cost products have reached the market, “a lot of which could be considered borderline junk”, said IDC’s Ryan Reith. However, Google’s announcement of Android One (which will require a minimum set of specifications and standards) aims to change that.

Phablets (5.5″ – 7″ devices) are growing in popularity. They currently represent 14% of the market, which is expected to grow to 32.2% in 2018. Apple has the ability to drive replacement cycles in mature markets – despite the recent slower growth – with the expected launch of and pent-up demand for a 5.5″ iPhone.