Smart-Phone Market To Double By 2017

Thanks to today’s wide range of available models, the number of smart phones shipped soon will double, according to the Mobile & Wireless Communications Report from IHS Inc. The information and analytics provider expects total shipments to reach 1.5 billion units in 2017, up from 712 million in 2012.

Year to year, shipments will rise from 712 million in 2012 to 897 in 2013, with a compound annual growth rate (CAGR) of 15.8% taking that total to 1.1 billion in 2014, 1.2 billion in 2015, and 1.4 billion in 2016, IHS says.

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“The volume of new flagship smart-phone releases from top original equipment manufacturers (OEMs) this year has been astounding,” said Wayne Lam, senior analyst for consumer and communications at IHS. “These include the new BlackBerry Z10, the aluminum uni-body HTC One, and an update to the Samsung Galaxy S4 featuring a Full HD 5-inch active matrix organic light emitting diode (AMOLED) display.”

Despite this overall growth, Apple’s 3.74 million iPhones in the first quarter fell below expectations. With Apple’s next model not expected until the second half of the year, iPhone full-year sales volume may be essentially flat at around 150 million units, compared to 134 million in 2012.

“The possible slowing growth of the iPhone and the rapid pace of competitive smart-phone releases 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 smart-phone-centric,” Lam said.

Smart-phone penetration continued to increase in the fourth quarter of 2012 and the first quarter of 2013 as smart phones outshipped feature phones in the overall branded cell-phone market. After total mobile handsets topped 400 million for the first time in the fourth quarter of 2012, they contracted by nearly 50 million in the first quarter of 2013 with the close of the holiday shopping season.

Samsung’s strong growth continued in the first quarter with a sequential increase of 9 million units. Also, Coolpad and Gionee outshipped HTC and Motorola in the first quarter. Chinese smart-phone OEMs achieved their growth through a catalog of largely available smart phones, while Samsung rolled out low-cost variants of its high-end flagship products.

IHS believes these competitive forces and changing consumer demand will pressure Apple and other OEMs to innovate and diversify their offerings. Consumers are looking for more immersive experiences and visual content. Many smart phones are moving to 5-in. or larger full HD displays to accommodate these market needs.

As the display expands, so does the overall footprint because of larger batteries, which support more powerful processors, memory, and sensors. These features, though, drive up costs for OEMs. Still, IHS anticipates opportunities for component supplies to win design slots to multiply as smart-phone design variations increase, which is good for the overall supply chain.