Smartphones Expected to Outship Feature Phones in 2013

International Data Corporation (IDC) is a market research, analysis and advisory firm. They specialize in information technology, telecommunications and consumer technology. IDC has its headquarters in Framingham, Massachusetts

IDC is predicting that in 2013 more smartphones will shipped globally than feature phones. A feature phone is described as a mobile phone which is priced at the mid-range in a wireless provider’s hardware lineup. A feature phone has additional functions over and above a basic mobile phone. However, a feature phone may not be considered a smartphone because it lacks some of the more advanced attributes. Basically it is a phone intended for customers who want a multipurpose phone but at a more moderate price. They don’t want the expense of a more high-end smartphone.

IDC’s Worldwide Quarterly Mobile Phone Tracker report states that “vendors will ship 918.6 million smartphones this year, or 50.1 percent of the total mobile phone shipments worldwide.” That is just enough to put smartphones in the lead.

There are five top markets for smartphone shipments. According to IDC’s report they are broken down as follows;

China will easily remain the world's largest market for smartphones, specifically low-cost handsets based on the Android operating system and to a lesser degree iOS. While shipment volume to the country will remain at the top, growth will slow toward the end of the forecast period. Also, smartphone prices are expected to fall amid increased competition. Consequently, China's share of the global smartphone market will be diluted somewhat as more smartphones are shipped to India, Brazil, and other emerging markets.

Now that smartphone users constitute the majority of all mobile phone users in the United States, IDC expects slower growth in the years ahead. Underpinning its growth is the constantly shifting operating system landscape, in which resurgent BlackBerry and Windows Phone aim to gain salience against incumbents Android and Apple iOS.

India's year-over-year smartphone shipment growth will be the highest among the top countries by a wide margin as the vast majority of the country's wireless subscriber base currently use feature phones. The smartphone market will grow due to a variety of factors including greater availability of low-cost devices and additional sales emphasis by top-flight vendors on less populous parts of the country. In addition, 3G network coverage will continue to expand while 4G networks are expected to stimulate smartphone growth from 2015 onwards.

Brazil's smartphone market rise is driven by a confluence of circumstances, such as tax breaks for vendors that create jobs via local mobile phone production. Wireless service providers are offering greater subsidies to drive smartphone sales with an eye on higher data revenue streams in the future. The successful rollout of Long-Term Evolution (LTE) networks in Brazil is key to the country's smartphone market growth.

Growth of the United Kingdom smartphone market has slowed considerably in recent quarters as penetration has risen and economic growth remains minimal at best, which has led to consumer trepidation. The size of the market and its wealth relative to much of Western Europe will make it a smartphone volume leader over the forecast given the ongoing transition to LTE networks and continued high carrier subsidies.

Melissa Chau is senior research manager for IDC Asia/Pacific. She said, "While we don't expect China's smartphone growth to maintain the pace of a runaway train as it has over the last two years, there continue to be big drivers to keep the market growing as it leads the way to ever-lower smartphone prices and the country's transition to 4G networks is only just beginning. Even as China starts to mature, there remains enormous untapped potential in other emerging markets like India, where we expect less than half of all phones shipped there to be smartphones by 2017, and yet it will weigh in as the world's third largest market."

In large part, this is due to three factors, worldwide smartphone prices have dropped, the smartphone strata are wider than ever and the roll out of 4G wireless networks. IDC’s forecast is that by the end of 2017 1.5 billion smartphones will be shipped out globally. This would represent slightly over two thirds of the total mobile phone forecast for 2017.

You can see a breakdown of the top five country’s smartphone shipments in the following chart;

Source: IDC Worldwide Mobile Phone Tracker, March 4, 2013