Mobile | Research

Smart Phones Set To Overtake Feature Phones This Year

Smart phones are expected to overtake feature phones in worldwide shipments for the first time this year. According to a new forecast released by market research firm IDC, year-over-year growth in smart phones will approach 33 percent in 2013 and continue strong for the next five years.

"2013 will mark a watershed year for smartphones," said Ramon Llamas, research manager for IDC's Mobile Phones program, in a prepared statement. "If you look at the number of vendors who support both feature phones and smartphones, many of them have not only successfully transitioned their product portfolios to highlight smartphones, but smartphones have become their primary value proposition going forward. In some cases, smartphones have accounted for well over 50 percent of their quarterly shipment volume. Looking ahead, we expect the gulf between smartphones and features phones to grow ever wider."

IDC forecast total unit shipments of 958.8 million, up from 722.5 million smart phone units last year, a increase of about 32.7 percent. Should that figure be realized, smart phones will account for 52.2 percent of all mobile phone shipments across the globe.

In emerging markets, of course, smart phones will see the greatest growth — 45.4 percent this year, with a compound annual growth rate of 15.7 percent through 2017. But even developed markets will continue to experience strong growth — 14.3 percent this year and an 8.3 CAGR through 2017. (By IDC's reckoning, developed markets include the United States, Canada, Western Europe, Japan, Australia, and New Zealand.) Across all markets, the CAGR for smart phones will be 13.3 percent through 2017.

At the same time, the cost of smart phones is coming down overall.

"With the rise in global smartphone shipments, demand has quickly spread from developed markets to emerging markets. As a result, smartphone average selling prices (ASPs) have declined to $372 in 2013, down from $407 in 2012 and $443 in 2011," according to IDC. "As this trend continues, smartphone ASPs are expected to drop as low as $309 by 2017 with emerging market demand the main catalyst in this change. Computing at such low end-user cost has posed many challenges to handset OEMs and component suppliers."

The cost in emerging markets will drop more quickly than in developed markets. IDC pinned the average price of a smart phone in emerging markets at $307 for 2013, which will decline 4.2 percent year over year to reach $259 by 2017. In developed markets, IDC put the 2013 average price for a smart phone at $491. That is expected to decline 3.3 percent year over year to reach $430 by 2017.

"Driving smartphones forward has been a perfect combination of strong demand from end users, greater emphasis by both carriers and vendors, and a deep selection of devices available at multiple price points," according to IDC. "In addition, user behavior has switched from simple voice telephony to data consumption and creation, and the smartphone has become the ideal tool for many users."

Additional details can be found in IDC's Worldwide Quarterly Mobile Phone Tracker.

 

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