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April 22, 2013

Low-Cost Smartphones to Account for Nearly Half of Smartphone Shipments by 2018

Even though smartphones have become dominant over feature phones in terms of sales in many countries recently, there will still always be significant demand for lower-end devices. Even Apple, which continues to be among the top smartphone manufacturers in the world with only one premium device, has recognized the power of the low-end smartphone market as rumours of a low-cost iPhone float around the Internet.

As such, ABI Research's latest Mobile Handset Markets Database report should prove an interesting reading for Apple execs as it states that shipments of low-cost smartphones will grow from 259 million in 2013 to 788 million in 2018. The report, which breaks smartphones into three price tiers — low (sub-$250), mid (sub-$400) and high ($400+) — also states that the latter two price tiers will grow from 635 million to 925 million over the same period.

In other words, low-cost smartphones will account for nearly half, 46 percent, of smartphone shipments by 2018.

“As the feature phone segment continues to lose its battle for relevance, the low-cost smartphone has become the tool for operators seeking to drive increased data revenues,” said ABI Research senior analyst, Michael Morgan, in a statement.

Indeed, the growth of smartphones in emerging markets and their availability from pre-paid mobile operators are expected to be the primary drivers of low-cost smartphone growth. Developed markets and subsidized carriers, meanwhile, are also finding that low-cost smartphones have captured the interest of the remaining consumers who still use feature phones, while minimizing the margin impacts of subsidizing high-cost smartphones.

It also helps that low-cost smartphones — like the Nokia Lumia 620, which offers decent performance and a full smartphone experience for under $250 — have begun to improve in quality as manufacturers vie for customer attention.

Of course, mid and high-cost smartphones will still play an important role for operators and device manufacturers in the coming years, but the greater value offered by low-cost smartphones will obviously prove to be quite a draw for consumers.

Edited by Stefania Viscusi

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