Steady Decline in Smartphone ASPs Has Spurred Shipment Growth—IDC Says

The latest Worldwide Quarterly Mobile Phone Tracker released by the International Data Corporation (IDC) predicts that the shipments of smartphones will exceed one billion handset units in 2013, an increase of 39.3 percent over 2012, and are projected to reach 1.7 billion units in 2017. The decline in smartphone average selling prices (ASPs) has been driving the growth of the smartphone market. IDC expects smartphone ASPs to drop to $337 in 2013, compared to $387 last year, and to further decline to $265 by 2017.

Even if the North American and Western European markets are close to smartphone saturation, emerging markets still generate significant demand for low-cost computing. And this has spurred the growth of the smartphone market.

“Just a few years back the industry was talking about the next billion people to connect, and it was assumed the majority of these people would do so by way of the feature phone,” said Ryan Reith, program director for the Worldwide Quarterly Mobile Phone Tracker at IDC. “Given the trajectory of ASPs, smartphones are now a very realistic option to connect those billion users.”

“The key driver behind smartphone volumes in the years ahead is the expected decrease in prices,” said Ramon Llamas, research manager of the Mobile Phone team at IDC. “Particularly within emerging markets, where price sensitivity and elasticity are so important, prices will come down for smartphones to move beyond the urban elite and into the hands of mass market users. Every vendor is closely eyeing how far down they can price their devices while still realizing a profit and offering a robust smartphone experience.”

Android has opened doors for numerous new manufacturers to launch their forays into the smartphone market. In order to establish brand awareness, many handset vendors have developed and marketed low-cost mobile devices. This has contributed to the waning ASPs of smartphones.

Worldwide Smartphone Forecast by Region, Shipments, Market Share and 5-Year CAGR (units in millions)

From 2013 to 2017, smartphone shipment volumes in emerging markets such as Asia/Pacific, Latin America, and Middle East and Africa (MEA) are expected to grow robustly. In terms of worldwide market share, the regions of Asia/Pacific and Latin America are predicted by IDC to post growth from 2013 to 2017. Meanwhile, a decline in market share for the same period has been predicted for Europe, North America, and MEA. All in all, the global smartphone market is estimated to post an 18.4 percent compound annual growth rate (CAGR) from 2013 to 2017.

 Worldwide Smartphone Average Selling Price (ASP) by Region and 5-Year CAGR (figures in $USD)

In terms of worldwide smartphone ASP, a combined 7.3 percent decline in five-year CAGR has been predicted. According to IDC, this eventual lowering of smartphone ASPs will “enable more users to afford smartphones for the first time, and in many cases, allow users to bypass purchasing feature phones altogether and go straight to smartphones.” (KOM) Link. Link.