Smartphone Market in China Likely to Double By 2017: Report

Chinese households able to afford a smartphone are expected to rise from 40 percent to 80 percent by 2017, according to a new report. Such reports have set the hopes of vendors from Apple to Huawei to HTC and Microsoft.

In China, the first country to tally more than 1 billion mobile subscribers, the number of households able to afford a smartphone is expected to double, from 40 percent to 80 percent, by 2017, according to new data from research firm Research2Guidance.

The report is good news for smartphone vendors from HTC, Research In Motion and Apple to supporters of both the Android and Microsoft Windows platform, which are counting on considerable sales from the country that during the first quarter passed the United States to become the world€™s largest smartphone market.

With a strong appetite for consumer goods and increasing disposable income€”boosted by a strong economic expansion but a slow population growth, explained the report€”more than 50 percent of China€™s population will be part of the middle class by mid-2012, with that figure nearing 60 percent by 2013. Between 2016 and 2017, the firm, basing it guidance on World Bank and International Monetary Fund data, expects a steeper climb from nearly 60 percent up to 80 percent.

€œWe expect middle class to be households earning an annual income between U.S. $8,500 to $60,000 and that usually spend a third of income on discretionary spending,€ Research2Guidance€™s Daiana Bassi wrote in a July 12 blog post on the report.

While the smartphone market has traditionally been dominated with devices that sell for approximately U.S. $314, said Bassi, €œmost Chinese users own a mobile phone that is priced at significantly less [than that].€

Increasing household purchasing power and a €œsurge€ of phones priced around the $157 (or 1,000 yuan) mark, from local vendors, including Huawei and ZTE and foreign vendors, including Nokia and Samsung, €œwill result in China€™s 1 billion mobile phone users being able to afford smartphones,€ wrote Bassi.

China€™s smartphone owners, as they have already, are expected to particularly boost the Android platform€™s global market share.

During the first quarter, Canalys found the pace of the U.S. smartphone market to have risen 5 percent year-on-year, while the Asia-Pacific region posted a walloping 81 percent growth, with China representing 22 percent of those shipments.

Despite Apple€™s strong showing in China, the report added, Samsung€™s Android-based smartphones were the top shippers to the region. During the first quarter, two-thirds of all smartphones to China were Android phones, and more than 25 of all Android phones that shipped globally went to China.

Microsoft, which with partners Nokia, Samsung, HTC and Huawei will introduce smartphones running Windows Phone 8 later this year, is also focusing on China. On March 21, Simon Leung, Microsoft€™s CEO for the Greater China Region, told reporters that Microsoft plans to overtake Android in China, and passing Apple is an €œinterim goal.€

€œWe will continue to drive the price down,€ Leung said, according to a report from Bloomberg. €œOur goal is [to be] No. 1. Having a goal to be No. 2 is not really a goal.€

The report added that Microsoft and its partners plan to offer devices for as low as $158.

During the second quarter of 2011, China likely passed the United States to become the largest market for PC ships.

€œChina€™s lead in the PC market is a huge shift that reflects the rising fortunes of emerging markets as well as the relative stagnation of more mature regions,€ IDC Program Vice President Loren Loverde said in a statement at the time. Economic circumstances in the United States and elsewhere, he said, €œhave not changed the trend, but accelerated it.€

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