Smartphones will always fly off the shelves, huh? Well, for the first time ever, the mature smartphone market will show signs of recession, according to a forecast from IDC.
The total smartphone projection for 2014 is 1.25 billion units worldwide, up 23.8 percent from 2013’s 1.01 billion units. That’s expected to rise to 1.8 billion units annually by 2018, for compounded annual growth of 12.7 percent.
While shipments are continuing to increase, this year’s growth is slowing to the single digits – only 4.9 percent growth – in mature markets from double-digit annual growth in prior years. On the other hand, emerging markets will see a 32.4 percent shipment increase, making this year a crucial transition period for the smartphone market as a whole and the fueling of emerging markets.
Emerging markets have accounted for more than half of annual smartphone shipments dating back to 2011, so it is no question that they have significantly contributed to the growth of the overall market.
What does this mean for the consumer?
Cost, or lack there of, is a major factor in smartphone growth in emerging markets. Cheaper smartphones are gaining momentum, as prices drop from $407 to $372 this year alone.
While mature markets are still delivering strong revenues with average selling prices over $400, emerging markets continue to barrel along, but with average selling prices of less than $250. According to Juniper Research, the average selling price of a smartphone will decline globally to reach $274 within five years.
Historically penetrating emerging markets contributes to price erosion. Third world and developing nations require devices that are affordable. In the past when manufactures catered to these markets volumes increased. Current sales figures for the iPhone 6 and 6 Plus show there is strong demand for high end units. I think it is premature to speculate manufactures can’t produce devices which facilitate steady sales.