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November 11, 2013

A Blizzard of Global Smartphones - New Ericsson Mobility Report Claims 5.6 billion Subscriptions by 2019

A new release of the Ericsson Mobility Report has made some rather bold-sounding predictions. We mean they sound bold however we're quite sure they are quite on target as well. The new report claims that mobile subscriptions of every kind will reach 9.3 billion by 2019. Is that more than 1 mobile phone for every member of the human race on planet earth by then? It certainly sounds like it.

That we would have this level of penetration is not unexpected. Other research reports have pointed to similar total human-blanketing numbers of mobile devices. Ericsson's report is relatively detailed and we'll return to other parts of it in a related article. Here it is worth noting the exploding growth of smartphones in particular. Just how much growth is there to be had?

What we find of particular interest here is that Ericsson anticipates in the report that over 60 percent of these subscriptions for mobile devices - or a whopping 5.6 billion of them - will be for smartphones. As the chart below indicates, smartphones currently represent roughly 25 to 30 percent of all mobile phone subscriptions. But for Q3 2013 they represent 55 percent of all mobile phones sold during the quarter. This clearly underscores where the trend line is headed.

The growth trend of course is primarily being driven by emerging world countries as they move quickly to bring most of their populations wirelessly online. Both China and India are already playing huge roles here and that will simply continue to raise the bar for the rest of the decade.

Douglas Gilstrap, Senior Vice President and Head of Strategy at Ericsson, notes exactly this in saying, "The rapid pace of smartphone uptake has been phenomenal and is set to continue. It took more than five years to reach the first billion smartphone subscriptions, but it will take less than two to hit the 2 billion mark. Between now and 2019, smartphone subscriptions will triple. Interestingly, this trend will be driven by uptake in China and other emerging markets as lower-priced smartphone models become available."

Though the report doesn't focus on specific operating systems, we ourselves believe that it is this pent up demand for smartphones - especially in China - that will see Apple capture plenty of sales for its mid-range iPhone 5c (and other related devices coming down the road). Never the less, on the lower end of the spectrum it will be a world dominated by Android but also one where we believe a great deal of new market penetration by Windows Phone 8 and subsequent iterations will appear.

This growth has implications as well for the world's wireless networks. To support the smartphone user experience, Ericsson predicts that WCDMA/HSPA networks will cover 90 percent of the world's population by 2019. In addition Ericsson believes that 65 percent of the world's population will be covered by 4G/LTE networks. This is of great significance in many ways - especially if we consider just how much wireless data traffic will be generated by those 5.6 billion smartphones that will need to be handled by the global wireless networks.

Ericsson suggests that smartphone traffic will grow by a factor of 10X between 2013 and 2019, and will reach an amazing 10 exabytes of wireless data traffic. Video is the most dominant component of that traffic and continues to grow at a rate of 55 percent annually. It will easily represent 50 percent and more of all mobile data traffic by 2019. Social networking and web services will account for about 10 percent each in wireless traffic in 2019.

All in all the mobile world continues to grow - anyone who thinks we are reaching a smartphone saturation point is hardly correct in thinking that there isn't a great deal of ongoing upside here for all the major mobile device manufacturers. The decade will continue to see enormous wireless and mobile growth.

Edited by Cassandra Tucker

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