With most of the top brands introducing new flagship smartphones in the first half of 2013, consumers now have more choices than ever, helping smartphone shipments to double from 2012 to 2017, according to a new Mobile and Wireless Communications report from information and analytics provider HIS.
Smartphone shipments are set to rise to 897-million units this year, up from 712-million units in 2012. However, in the years that follow, shipments of smartphones will accelerate at a compound annual growth rate (CAGR) of 15,8%, reaching 1,1-billion units in 2014, followed by 1,2-billion in 2015 on their way to more than double the 2012 unit number at 1,5-billion units in 2017.
The rise of smartphone shipments is partly the result of the sheer number of new flagship products coming from top original equipment manufacturers (OEM). These include the new BlackBerry Z10, the aluminium uni-body HTC One, and an update to the Samsung Galaxy S4 featuring a 5-inch active matrix organic light emitting diode (AMOLED) display.
At the same time, Apple’s iPhone franchise appears to be stalling as first-quarter shipments of 37,4-million fell below expectations. With the next iPhone model not expected until the second half of the year, there is a real possibility that the full-year 2013 sales volume of the iPhone may be essentially flat at around 150-million units, compared to those levels set in 2012.
The possible slowing growth of the iPhone and the rapid rise of flagship introductions from competitors speak to the ferocious nature of the handset business, especially now as the market continues to pivot from a market dominated by lower-end handsets known as feature phones to one that is increasingly more smartphone-centric.
The trend of deeper smartphone penetration continued in the fourth quarter of 2012 and the first quarter this year, as smartphones outshipped feature phones in the overall branded cell phone market.
After a seasonally high fourth quarter, which saw total mobile handset shipments topping 400-million units for the first time, handset shipments in the first quarter of 2013 contracted by nearly 50-million units quarter-over-quarter, keeping with seasonal sales trends.
Samsung continued its strong growth in the first quarter with a sequential increase of 9-million units, while Chinese domestic smartphones continued on a phenomenal growth path that began in 2012 with brands such as Coolpad and Gionee outshipping the likes of HTC and Motorola in the first quarter.
Chinese smartphone OEMs were able to accomplish such growth on the back of a catalogue of largely affordable smartphones, while Samsung rolled out a number of low-cost variants to its high-end flagship products.
These competitive forces, as well as changing consumer demand, will place pressures not only on Apple but also on other OEMs, IHS believes, forcing players to innovate and diversify smartphone offerings in order to continue growing.
Innovation in smartphone design is becoming a necessity for OEMs as consumers demand more immersive user experiences and visual content. Many smartphones, for instance, are moving to 5-inch or larger displays to accommodate consumer desire for these experiences.
In parallel with an expanded display, the overall footprint of smartphones is likewise increasing because of larger batteries, which will then allow for more powerful processors, associated memory and sensors.
But these expanded features come at a cost to OEMs, driving up the dollar content of electronics and pushing the bill- of-materials (BOM) cost for the devices. Still, as variations in smartphone designs increase, opportunities to win design slots multiply as well for component suppliers – developments that bode well for the overall smartphone supply chain.
