Worldwide Smartphone Growth Forecast to Slow from a Boil to a Simmer as Prices Drop and Markets Mature, According to IDC

FRAMINGHAM, Mass.--(BUSINESS WIRE)--According to a new mobile phone forecast from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, worldwide smartphone shipments will reach a total of nearly 1.3 billion units in 2014, representing an increase of 26.3% over 2013. Looking ahead, IDC expects 1.4 billion smartphones to be shipped worldwide in 2015 for a 12.2% year-over-year growth rate. Slower annual growth continues throughout the forecast with unit shipments approaching 1.9 billion units in 2018, resulting in a 9.8% compound annual growth rate (CAGR) for the 2014–2018 forecast period. Smartphone revenues reflect a starker picture, as they will be hard hit by the increasingly cutthroat nature of pricing, resulting in a 4.2% CAGR over the same forecast period.

"The impact of upstart Chinese players in the global market will be reflected in a race to the bottom when it comes to price. While premium phones aren't going anywhere, we are seeing increasingly better specs in more affordable smartphones. Consumers no longer have to go with a top-of-the-line handset to guarantee decent hardware quality or experience," said Melissa Chau, Senior Research Manager with IDC's Worldwide Quarterly Mobile Phone Tracker. "The biggest question now is how much lower can prices go?"

On a worldwide basis, smartphones are expected to have an average selling price (ASP) of US$297 worldwide in 2014, dropping to US$241 by 2018. Emerging markets like India will see much lower smartphone prices, as ASPs hit US$135 in 2014 and fall to US$102 by 2018. In contrast, ASPs in mature markets are not expected to change significantly and modestly higher shipment volumes will not drive up overall revenues as each generation of flagship phones shows less and less differentiation from its predecessors.

From an operating system perspective, Android devices will continue to drive shipment volumes while iOS devices drive revenues. By 2018, Android will control 80% of global smartphones shipped and 61% of revenues, while iOS will control only 13% of volumes and 34% of revenues. With Android volumes so dominant, it is no longer a possibility for new operating systems like Tizen and Firefox to compete on price alone – any underdog OS must bring a radically different appeal to gain any significant traction.

"As shipment volume slows, we expect greater attention to shift toward value trends," said Ramon Llamas, Research Manager with IDC's Mobile Phones team. "Apple's approach with premium pricing ensures a growing portion of overall revenues despite its declining market share. Meanwhile, Android's multi-faceted approach – with forked versions and low-cost Android One strategy – will produce mixed results, yet it allows deeper penetration into emerging markets. That can lead to additional pressure on its vendor partners, who will need to seek greater differentiation in terms of devices and experiences in the hyper-competitive smartphone market."

Worldwide Smartphone Forecast by Shipments and Value, 2014 and 2018
(Shipments in millions of units and Value in US$ Million)
	2014*	2014* Market Share	2018*	2018* Market Share	2014-2018 CAGR
Shipment (M units)
Android	1,060	82.3%	1,498	80.0%	9.0%
iOS	178	13.8%	240	12.8%	7.8%
Windows Phone	35	2.7%	105	5.6%	31.4%
Other OS	14	1.1%	30	1.6%	20.4%
Total	1,288	100.0%	1,873	100.0%	9.8%
Value (US$M)
Android	255,102	66.6%	275,248	60.9%	1.9%
iOS	116,540	30.4%	152,626	33.8%	7.0%
Windows Phone	7,782	2.0%	19,033	4.2%	25.1%
Other OS	3,480	0.9%	4,862	1.1%	8.7%
Total	382,904	100.0%	451,769	100.0%	4.2%
Source: IDC Worldwide Quarterly Mobile Phone Tracker, December 1, 2014
* Forecast data

Table Note: Values are calculated by multiplying the shipment volumes with the end-user average selling prices (ASPs). Figures may not be exact due to rounding.

In addition to the table above, an interactive graphic showing 2018 shipment and value share by operating system is available here. Instructions on how to embed this graphic into online news articles and social media can be found by viewing this press release on IDC.com.

About IDC Trackers

IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools. The IDC Tracker Charts app allows users to view data charts from the most recent IDC Tracker products on their iPhone and iPad.

For more information about IDC's Worldwide Quarterly Mobile Phone Tracker, please contact Kathy Nagamine at 650-350-6423 or [e-mail].

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community to make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. In 2014, IDC celebrates its 50th anniversary of providing strategic insights to help clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com. Follow IDC on Twitter at @IDC.

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