SAN FRANCISCO—Smartphones are now expected to account for the majority of cellular handset shipments for the first time in 2013, two years earlier than previously predicted, according to market research firm IHS iSuppli.
According to an IHS report released Tuesday (Aug. 28), smartphones are now expected to account for 54 percent of handset shipments in 2013, up from an estimated 46 percent this year and 35 percent in 2011. The firm cites increased demand from developed regions for high-end smartphones along with an unexpectedly strong push from emerging economies for lower-cost smartphones.
"This represents a major upgrade for the outlook compared to a year ago, when smartphones weren’t expected to take the lead until 2015," said Wayne Lam, senior analyst for wireless communications at IHS. "Over the past 12 months, smartphones have fallen in price, and a wider variety of models have become available, spurring sales of both low-end smartphones in regions like Asia-Pacific, as well as midrange to high-end phones in the United States and Europe."
Lam predicts that smartphone shipments would continue to grow by double digit percentages for the next few years. By 2016, Lam expects smartphones shipments to account for 67.4 percent of the total cell phone market.
Smartphones are expected to account for less than 50 percent of the handset market in 2012. But by the end of the year, IHS expects smartphones to pass feature phones to become the largest segment of the cell phone market.
Shipments of feature phones—a grade above the most basic, low-cost entry-level phones—are expected to decline in coming years as the smartphone continues its rise, according to IHS. Shipments of feature phones are expected to decline to 41 percent of the total market in 2012, down from 46 percent last year, according to IHS. By 2016, the firm expects shipments of feature phones to decline to 28 percent of the total market.
Entry level and ultra-low-cost handsets are expected to account for about 14 percent of the market in 2012, falling to 4.2 percent by 2016, according to IHS.
SmartPhone adoption is experiencing positive feedback growth as media buzz and user experiences shared with friends increase demand. When telephone contracts last 1 or 2 years, people must question whether they want to be locked out of the market with their next mobile phone.
Honestly I don't see how some of the handset vendors continue to stay in business... it is largely the carriers that are making money and the handset makers are seeing big losses:
Some of the marketing models now common in Asian countries (like life time incoming calls free and no expiry date on prepaid phones with no currency left!) will have to change for smartphone usage. This will be a tough sell.
A decent/easy to use smartphone with a 50-80$ price tag will speed up the adoption. I have tried some of the current 100-150$ smart phones from Asian vendors and they are not impressive in user experience. The user in the lower segment need a much more simpler UI than the expensive phones and not just cheap HW with stock Android slapped on to it.
In my opinion, this is not really a big surprise. We've seen the popularity of smartphones go through the roof and stay there. Perhaps the one thing that fewer people saw coming were the price declines and the rise of low-end smartphones, making it more realistic for people in developing countries.
At the same time, there are still people that believe the feature phone has legs.
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