International Data Corp. (IDC) is forecasting that 1.7 billion smarthphones will be shipping by 2018, but the number of phones flooding into the market per year are beginning to decline as markets get saturated.
This year will mark the end of the massive double-digit growth levels seen over the last several years, said IDC. The reason for the fall off is two fold, first the U.S., European and Japanese markets are now mature to the point where sales have slowed, secondly emerging market customers are demanding something not normally found in this category - an inexpensive smartphone, said Ryan Reith, Program Director with IDC's Worldwide Quarterly Mobile Phone Tracker.
"2014 will be an enormous transition year for the smartphone market. Not only will growth decline more than ever before, but the driving forces behind smartphone adoption are changing. New markets for growth bring different rules to play by and 'premium' will not be a major factor in the regions driving overall market growth."
This demand will result in plummeting average selling prices during the coming years. IDC expects these to hit $260 by 2018 down from $335 this year.
"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. Just as the dynamics have changed for overall smartphone growth, so have the dynamics for smartphone pricing in the markets where continued growth is expected. Not all vendors will want to get into this space, but those that do must make deliberate choices about their strategies in order to succeed."
Despite all the noise and news generated with each new incarnation of Apple's iPhone, Android is the world's favorite operating system when it comes to smartphones, IDC said. This year Android is expected to control 78.9 percent of the market, compared to Apple's 14.9 percent. IDC said Android will retain its lead largely due to its lower price point, making it more affordable to those in emerging markets.
While Apple may not gain any ground against Android, iPhones will retain a higher average selling price going forward.
These numbers will remain steady over the next several years with Android dipping a few points and iOS slipping slightly to 14.4 percent of the market.
Windows Phone will see some healthy growth increasing its share to 7 percent from 3.9 percent in 2014. IDC credits Nokia and the emerging markets for the potential growth in Windows Phone units. On the flip side Blackberry will all but disappear from the market as it watches its share fall from 1 percent to just 0.3 percent in four years.
