“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, in a statement. “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)
Source: IDC Worldwide Quarterly Mobile Phone Tracker, December 1, 2014
MacDailyNews Take: For reference, and so that you can assign a value to the predictions above, here are some of IDC’s previous forecasts:
IDC: Worldwide Smartphone Operating System 2011 and 2015 Market Share and 2011-2015 Compound Annual Growth Rate:
Note: Market share based on unit shipments.
Source: IDC Worldwide Mobile Phone Tracker, June 6, 2012
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