Smartphone Prices Fall, Drive Increase in Shipments

Smartphone shipments are expected to surpass 1 billion units in 2013, a 39.3 percent growth over 2012.

That’s according to the latest International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker forecast.

Even though markets such as North America and Western Europe are nearing smartphone saturation, the demand for low-cost computing in emerging markets is what is driving the smartphone market, IDC said. Come 2017, total smartphone shipments are expected to approach 1.7 billion units that’s a compound annual growth rate (CAGR) of 18.4 percent from 2013 to 2017.

No current trends in the smartphone market have more of an effect on growth than the decline in average selling prices (ASP). A number of handset vendors around the world are focused on low-cost devices as a method to build brand awareness. IDC expects smartphone average selling prices to be $337 in 2013, down 12.8 percent from $387 in 2012. This trend will continue and will eventually drop to $265 by 2017.

“The game has changed quite drastically due to the decline in smartphone ASPs,” said Ryan Reith, program director with IDC’s Worldwide Quarterly Mobile Phone Tracker. “Just a few years back the industry was talking about the next billion people to connect, and it was just assumed the majority of these people would do so by way of the feature phone. Given the trajectory of ASPs, smartphones are now a very realistic option to connect those billion users.”

From a volume perspective, emerging markets will post market-beating growth rates from 2013 to 2017. Meanwhile, developed markets will see market share erosion but will still continue to see volume increases in the same period, IDC said.

“The key driver behind smartphone volumes in the years ahead is the expected decrease in prices,” said Ramon Llamas, research manager with IDC’s Mobile Phone team. “Particularly within emerging markets, where price sensitivity and elasticity are so important, prices will come down for smartphones to move beyond the urban elite and into the hands of mass market users. Every vendor is closely eyeing how far down they can price their devices while still realizing a profit and offering a robust smartphone experience.”

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