Death of the smartphone?

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Copy of sa iphone sales Bloomberg Annual smartphone sales growth this year is expected to be 19.3 percent, then decline to 6.2 percent in 2018, says an IDC report. Picture: David Paul Morris/Bloomberg

London - They have become an essential part of everyday life, replacing everything from our TV to our games console. Yet analysts warn we may finally be tiring of constantly having to upgrade our smartphones – and say sales are set to drop dramatically.

Growth in global smartphone shipments will fall sharply this year and keep slowing through 2018, with average prices dropping significantly as demand shifts to China and other developing countries, according to market research firm IDC.

Annual growth in 2014 is expected to be 19.3 percent, then decline to 6.2 percent in 2018, IDC said in a report. That follows a 39.2 percent jump last year when smartphone shipments topped 1 billion units for the first time.

The forecast reinforces concerns on Wall Street that the explosion in smartphones that began with Apple’s iPhone in 2007 is coming to an end, at least in the US and other developed countries where consumers favour pricey, top-tier handsets.

Smartphone growth in North America and Europe is expected to shrink to single digits and Japan could even see a slight slowdown in shipments in the next few years, IDC said.

Manufacturers are increasingly focusing on China, where many consumers are upgrading from basic cellphones to smartphones selling for under $300 (R3 230).

“In North America we see more than 200 million smartphones in active use, not to mention the number of feature phones still being used,” said Ryan Reith, of IDC.

“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.”

The average selling price for smartphones last year was $335, already far below flagship devices like the iPhone 5S or Samsung Galaxy S4, and will fall to $260 by 2018, IDC said.

“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 cellphone 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 price band 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.” – Daily Mail

 

According to the IDC report:

Android will maintain its reign as the leading operating system throughout IDC’s forecast.

iOS will remain the clear No 2 platform behind Android. Apple has maintained a tight focus on the high end of the market with its most current devices, a trend we expect to see continue into the future.

Windows Phone stands to grow the fastest among the leading smartphone operating systems, with continued support from Nokia as well as the addition of new Windows Phone partners.

BlackBerry will be under constant attack from the competition. Its higher-than-average prices compared to other platforms could inhibit its growth potential.

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