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IDC warns of significant decline in smartphone growth

by Mark Tyson on 28 February 2014, 09:45

Tags: PC

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As MWC week comes to a close it's interesting to see a new report from the International Data Corporation (IDC) warning of a sharp decline in smartphone growth this year. The research is published in IDC's Worldwide Quarterly Mobile Phone Tracker. Worldwide shipments are expected to slow to single digits in a couple of years; we will see 8.3 per cent annual growth in 2017, sinking to 6.2 per cent by 2018. In North America, Europe and Japan we may be in the single digits this year.

The smartphone business has been doing a roaring trade with sales surpassing 1 billion for the first time in 2013, achieving a 39 percent year-over-year growth. However IDC says that 2014 will become the year where smartphone growth declines more significantly then ever previously, precipitating a 19.3 per cent year-over-year growth worldwide, with a total of 1.2 billion shipments.

High growth is still expected in several emerging markets, but growth in near saturated markets such as North America and Europe are said to drop to single digits, with Japan showing the possibility of contracting slightly. "In North America we see more than 200 million smartphones in active use, not to mention the number of feature phones still being used," said Ryan Reith, Program Director with IDC's Worldwide Quarterly Mobile Phone Tracker. "2014 will be an enormous transition year for the smartphone market".

However, some industry watchers have disagreed with the downbeat forecast, for the North American market particularly; "Around a third of U.S. consumers still have feature phones, and new apps and features make moving to smartphones more attractive every year. We see no evidence that demand is slowing,"said Carl Howe, Yankee Group analyst.

IDC has said that we will also see a change in the driving forces behind smartphone adoption in the near future, where new markets will "bring different rules to play by and 'premium' will not be a major factor in the regions driving overall market growth." I think we can already see the different rules coming into play as price becomes more of a factor, even at the high end and lower-middle market hardware gets much more capable. The average selling price for a smartphone is expected, by market analysts, to drop from what was $335 (£200) in 2013 to $260 (£160) by 2018.

"In order to reach the untapped demand within emerging markets, carriers and OEMs will need to work together to bring prices down," said Ramon Llamas, Research Manager with IDC's Mobile Phone team. "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 priceband this year, with some as low as $25 (£15)."

Further predictions include Google Android's continued dominance with more than 75 per cent of global sales into 2018 whilst Apple's iOS will stay in second position with a market share of 15 per cent. The Windows Phone platform is also expected to nearly double its market share from now to 2018, making it the fastest growing OS. Meanwhile BlackBerry's market share goes from its current 1 per cent to 0.3 per cent in 2018.



HEXUS Forums :: 15 Comments

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Interesting article - particularly interesting that IDC seem to be suggesting that Window Phone is going to build it's market share by pretty much taking business from Android. Based on what I've seen happen here, and from comments on Hexus, I think this is a distinct possibility. Heck, I've been giving serious thought to returning to Nokia!

Can't help wondering if the slow in sales is because there's not really anything “innovative” out there. The Galaxy S5 is really just S3++ (or maybe even S2+++), HTC seem to be following suit, and Apple have been accused for a while of just warming over the same design.

I've certainly not been enthused by anything in the reports from this years MWC, and there doesn't seem the buzz that there was when the S3 was being launched.
Got to admit having a Galaxy S3 I cannot see any reason to get a new phone right now, contract is due to end in April and I'm tempted to just switch to SIM only and keep using my Galaxy S3 until it dies.

I think the jump from my Nexus One to the S3 was worthwhile, but there isn't much need to jump to an S5 or Nexus 5 as they just don't give me enough to justify the expense.
KrisWragg
I think the jump from my Nexus One to the S3 was worthwhile, but there isn't much need to jump to an S5 or Nexus 5 as they just don't give me enough to justify the expense.
Totally agree - in fact someone suggested that I'm only really interested in Windows Phone because that'd give me something wildly different from what I've got now, whereas if I stick with Android then I'm on incremental change in both hardware and OS.
KrisWragg
Got to admit having a Galaxy S3 I cannot see any reason to get a new phone right now, contract is due to end in April and I'm tempted to just switch to SIM only and keep using my Galaxy S3 until it dies.
I jumped from contract-phone to SIM-free on the advice of some of our Hexus fellows when the S3 came out, and between buying it and now that phone's been on four different providers. Yes, you end up having to fork out a LOT of money up front, but on reflection I think it's been worth it for the contract flexibility - current contract with Virgin is a 30 day rolling. The advice I was given was that going for SIM-free does actually save money over the typical 24 month contract - and I've not seen any evidence to the contrary.

So yes, definitely consider going SIM-free if you can. It'd have to be a VERY good deal to persuade me to go back to the two year commitment. Only downside is finding someone reputable to accept your old phone come trade-in time - none of the mobile recycling companies I've read about have a good reputation, and I've had a bad experience with Envirofone.
Looks to me to be very typical of what I'd expect of market development of a new market. It's just going from a rapidly expanding new market to a more mature, more saturated one with incremental improvements getting smaller.

By and large, thise that want smartphones have them, and mostly have had several.

Those that don't want them, well, still mostly don't. That would include me.
Good job growth is slowing down, they are getting to big already!

I will say with people around me I got a windows phone (nokia 520) and based on messing with my phone 4 people I know have also converted to windows, I really would recommend it.