© dimitry romanchuck dreamstime.com Business | July 19, 2013
Cornucopia of Choices
With most of the top brands introducing new flagship models in the first half of 2013, smartphone buyers now have more choices than ever, a phenomenon that will contribute to an expected doubling in market shipments from 2012 to 2017.
Worldwide smartphone shipments will reach 1.5 billion units in 2017, up from 712 million in 2012, according to information and analytics provider IHS Inc. Shipments this year are set to rise to 897 million units, up from 712 million in 2012. In the years that follow, shipments of smartphones will expand at a compound annual growth rate (CAGR) of 15.8 percent, reaching 1.1 billion units in 2014, followed by 1.2 billion in 2015, and 1.4 billion in 2016. “The volume of new flagship smartphone releases from top original equipment manufacturers (OEM) 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.” On the other hand, 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 134 million units in 2012. “The possible slowing growth of the iPhone and the rapid pace of competitive smartphones 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 smartphone-centric,” Lam said. Outshipped 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 cellphone 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 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 catalog 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. Just innovate 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 full HD 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.
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