China will overtake the United States as the global leader in smartphone shipments in 2012, according to the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker.
China will account for 26.5% of all smartphone shipments in 2012, compared to 17.8% for the US, amid strong end-user demand and an appetite for lower-priced smartphones.
“Looking ahead, the PRC smartphone market will continue to be lifted by the sub-US$200 Android segment,” said Wong Teck-Zhung, senior market analyst, client devices, IDC Asia/Pacific.
“Near-term prices in the low-end segment will come down to US$100 and below as competition for market share intensifies among smartphone vendors. Carrier-subsidized and customized handsets from domestic vendors will further support the migration to smartphones and boost shipments. Looking ahead to the later years in the forecast, the move to 4G networks will be another growth catalyst.”
Regionally, the IDC said it expects smartphone demand to flow down to lower-tier cities. “After going through a period of sustained high growth, top-tier cities are likely to see decelerating smartphone growth rates,” said James Yan, senior market analyst for computing systems research at IDC China.
“In contrast, secondary cities are expected to experience accelerated smartphone growth, with strong demand for low-cost models as well as high-end models, which are desired as status symbols,” he continued.
The research group cautioned that the US smartphone market will not come to a grinding halt.
“Now that smartphones represent the majority of mobile phone shipments, growth is expected to continue, but at a slower pace. There is still a market for first-time users as well as thriving upgrade opportunities,” said said Ramon Llamas, senior research analyst with IDC’s mobile phone technology and trends program.
Several other countries will also emerge as key markets for smartphone shipment volume over the next five years, accoridng to the IDC.
“High-growth countries such as Brazil and Russia will become some of the most hotly contested markets as vendors seek to capture new customers and market share,” said Kevin Restivo, senior research analyst with IDC’s worldwide mobile phone tracker program.
The research group pointed out that lower end smartphones in China would mean lower average sales values (ASVs), thinner margins, and increased competition from all players. “Over the course of the forecast, China’s share of the global smartphone market will decline somewhat as smartphone adoption accelerates in other emerging markets,” it said.
Smartphone shipments into the US will accelerate as users upgrade their devices and feature-phone users switch over to smartphones.
“Furthermore, a combination of lower-priced models, expansion of 4G networks, and the proliferation of shared data plans will encourage continued smartphone adoption. Smartphones are already the device of choice at the major carriers, and regional and prepaid carriers are following suit and competing with alternative service plans,” the IDC said.
India, it said, has tremendous untapped growth potential. Low-end smartphones offering dual-SIM capability and local apps and priced around US$100 will rapidly bring this market to life.
The IDC said it expects the popularization of 3G, and in later years 4G, to drive smartphone uptake as operators roll out more affordable data plans and generous subsidies while expanding offerings to tier 2 and tier 3 cities.
Smartphone growth in Brazil will be bolstered by strategic investments by mobile operators, smartphone vendors, and regulators. “Operators’ focus on increasing ARPU will drive greater demand for smartphones while smartphone vendors will look to reap greater profitability from offering such devices.”
“The Brazilian government, meanwhile, will offer tax exemptions for smartphones and protect local manufacturing against foreign vendors. These factors, combined with solid end-user demand, will drive smartphone volumes in the coming years,” the IDC said.
Over the forecast period, smartphone shipments in the UK will continue to increase due to the introduction of LTE and a new range of services that will appeal to heavy smartphone users.
“In addition, price erosion on HSPA devices will also attract feature phones users. Growth rates will slow in the later years of the forecast as penetration plateaus and operators seek out alternative subsidy models,” the IDC finished.