Global Smartphone Growth to Slow, Prices to Drop

Global Smartphone Growth to Slow, Prices to Drop

Worldwide smartphone shipments will reach a total of nearly 1.3 billion units in 2014, an increase of 26.3 percent over 2013, according to a new forecast from International Data Corp. (IDC). However, the global market intelligence firm expects that in 2015, 1.4 billion smartphones will be shipped, representing a 12.2 percent year-over-year growth rate. Shipments will approach 1.9 billion in 2018, indicating a compound annual growth rate (CAGR) of 9.8 percent for the 2014–18 forecast period. Smartphone revenues are expected to show a 4.2 percent CAGR over the same period. Smartphones are expected to have an average selling price of US $297.00 worldwide in 2014, dropping to US $241.00 by 2018. Emerging markets such as India will see much lower prices, from US $135.00 in 2014 down to US $102.00 by 2018. Android devices will continue to drive shipment volumes, while iOS devices will drive revenues, according to IDC. By 2018, Android will control 80 percent of global smartphones shipped and 61 percent of revenue, while iOS will control 13 percent of volume and 34 percent of revenue.

Tarifica’s Take

While worldwide smartphone shipments will not be declining over the next four years, the rate of growth in shipments will decline, according to IDC’s projections, and that reflects several trends that we have observing, as well. Higher rates of penetration account for growth rates that are much lower than obtained during the period of rapid device adoption. In the developed markets this trend is particularly marked, but it is true to a lesser extent in other regions. In an increasingly saturated global smartphone market, it is simply not possible for growth to continue at the same pace as it has been. Also, though it is much less significant as a factor, it should be noted that cellular-enabled tablets with voice capability are squeezing smartphones in emerging markets, where users may choose to have only one device.

As inexpensive smartphones come with more features and more power, inevitably there will be downward pressure on global pricing. This phenomenon is especially marked in emerging economies like India, though it is by no means limited to them. It appears likely that mid-range smartphones will have the hardest time competing with low-priced but relatively full-featured devices, whereas the highest-end smartphones, particularly Apple’s iPhone, will show the strongest growth in revenue.