HomeComputingMobileInternetGamingElectronicsExtremeDealsHomeMobileThe party’s over: IDC predicts sharp decline in smartphone market growth, with no replacement in sightThe party’s over: IDC predicts sharp decline in smartphone market growth, with no replacement in sightBy Joel Hruska on February 27, 2014 at 8:38 amComment
Share This article For years, even as the PC market has slumped, the tablet and smartphone business has roared ahead. The shift in production and demographics caught traditional OEMs flat-footed and drove tens of billions of dollars into the pockets and Samsung, Apple, and… well, pretty much just those two. Now, IDC is reporting that the years of meteoric growth could be coming to an end. The company predicts smartphone sales will increase 19% this year, down from 39% in 2013. By 2018, the increase in year-on-year sales is expected to be an anemic (or nearly mature) 6.2%.
This shift could cause a significant shakeup of the present Apple-Samsung profit duopoly. According to recent measurements from Raymond James, Apple accounts for 87.2% of the smartphone market’s profits, while Samsung gathers a respectable 32.2%. The reason the figures add up to over 100% is simple — everyone else is losing money and therefore awarded negative market value.
Both companies have made enormous profits out of positioning their respective devices as lifestyle products, but the move could cost them market share in the long term as customers turn from gawking at the products carried by the rich and famous to buying more modest devices of their own. It’s no accident that the surge in low-end smartphones has been accompanied by rising interest in companies like MediaTek and RockChip. These SoC developers don’t have the name-brand recognition of a Qualcomm, but they do have a keen interest in building business in the low-end smartphone market.
This chart uses a different analysis method than the Raymond James figures, but the conclusions are similar.IDC expects low-end sales to be the principle drivers of the market, which could hurt companies like Apple, whose “low-end” iPhone 5C reportedly sold poorly as buyers opted instead for the more expensive 5S. In the short run, that’s a problem businesses would love to have, but in the longer game Apple needs to build budget phone that people want to buy.
No surprises in the OS marketIDC predicts that iOS and Android will continue to dominate the phone market, with the majority of that gain going to Android, since almost all low-end smartphones use that platform. The firm does note, however, that Windows Phone could see strong adoption in emerging markets thanks to a new set of nine partners and Nokia’s continued efforts. By 2018 the analyst agency believes Android will hold a 76% market share, with iOS accounting for 14.4% and Windows Phone at 7%. BlackBerry will still hang on, at 0.3%, and “Others” will account for that last 2.3%.
If the smartphone market slows as sharply as IDC predicts, it could put a serious damper on the entire tech industry. The shift to smartphones offsets the decline in PCs, ensuring that companies still have a reason to invest in the latest foundry technologies and killer next-generation products, whether that meant Gorilla Glass, sapphire screens, or multi-core processing.
If that income stream starts to falter with nothing to replace it, it could shake investor confidence in the entire system. Some of the focus on wearable technology makes more sense from this perspective — manufacturers are desperate to find the Next Big Thing before the smartphone sales engine slows down with nothing to replace it.
Tagged In mobile computingmicrosoftsmartphonesappleandroidsamsungiosARMwindows phonetizenmarket shareShare This Article .article {margin:0px !important;}.AR_1 {margin :0 0 20px 0 !important;}.AR_2 {margin:0 0 20px 0;} CommentPost a Comment IbrinarOh dear a profitable market only growing by 6 procent (doubling every 12 years) being a problem sounds problematic.
Ray CI’m sure Windows Phone will be more than 7%, but I’m not sure why any of this is a shock to anyone. Let’s not forget that during the PC boom, it wasn’t uncommon for the average person to not have a cell phone. It was even more likely that a college student or someone under 18 would not have one. Just like there was a push for everyone to have a PC and broadband, the next push was for everyone to have a cell phone. Then when you take into account the movement from feature phones to smart phones, of course there was going to be out of control growth for a while. But just like the PC and broadband, almost everyone has one. Also, everything eventually goes out of style or loses its luster. People buying high-end phones or certain models of phones because it’s seen as the device that the “somebodies” or the people with the money to buy them have was going to go out of style eventually. So, there should also be no surprise there. Hopefully people will start to realize they’re not getting what they pay constantly replacing the highest-end phone with the next highest-end phone. But most consumers aren’t that smart, so I doubt it
JD RahmanMakes sense. I can’t think of a single reason to replace my phone. Its light enough, battery lasts long enough, screen resolution is good enough and it performs well with the apps I use.
(i have an HTC One, but I would say the same thing if I had an S4 or iPhone 5)
Since PC/Notebooks have matured and now Smartphones, what will people spend their disposable income on?
JD RahmanMakes sense. I can’t think of a single reason to replace my phone. Its light enough, battery lasts long enough, screen resolution is good enough and it performs well with the apps I use.
(i have an HTC One, but I would say the same thing if I had an S4 or iPhone 5)
Since PC/Notebooks have matured and now Smartphones, what will people spend their disposable income on?
carol argoPeople want to be connected !yes! They want insanely powerful device !desktop PC on their belt?? Hell ya !there is one constant the classic hardware and is maker can be sure ? The more powerful it is the smaller it has to be ! The other thing Intel and ms can be sure ! It better look awesome ! So its a given we are gonna go wearable (no not the crappy PDA called Samsung gear or gear 2 we had PDA same size has today’s smartphone .it still exist by the way Samsung galaxy player 50its called.its still a pda .Intel have a pretty good idea of what need to happen .but Intel doesn’t want to make the final product ,just the component .like the Canadian wearable called pine , Intel can supply a lot of stuff but not the end product so yes user aren’t getting new device ! Who would when we all want a bling bling smart bracer and a bling bling smartbelt etc
preilly2There’s going to come a time when a significant percentage of consumers in the developed world will have all the devices they can stand and will tire of playing the upgrade game. I think eventually we’ll reach a saturation point on electronic distractions. We’ll always need and want a certain amount of technological innovation, but I can see a backlash at some point, when more and more people opt for old-fashioned diversions like spending unwired time outdoors and with their families.
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