Smartphone Shipments to Reach 1.25 Billion in 2014

In 2014, IDC expects emerging market smartphone volume to grow to 920.8 million units, accounting for 73.5 percent of all volume shipped.

smartphones and market share

More than 1.25 billion smartphones will be shipped worldwide in 2014, representing a 23.8 percent increase from the 1.01 billion units shipped in 2013, according to a report from IT research firm IDC.

Looking ahead, total volumes are forecast to reach 1.8 billion units in 2018, resulting in a 12.7 percent compound annual growth rate (CAGR) for the 2013-2018 forecast period.

In 2014, IDC expects emerging market smartphone volume to grow to 920.8 million units accounting for 73.5 percent of all volume shipped.

"As long as smartphones remain a minority portion of the overall world population, I think that is the point where smartphone growth slows down. We are not at that point yet, so expect continued growth and very large volumes," Ramon Llamas, IDC’s research manager for mobile phones and smartphones, told eWEEK. "Growth is going to come from emerging markets, as we pointed out in the press release. There’s still lots of room in Asia Pacific, Middle East and Africa, and Latin America."

The catalyst continues to be Android devices, which are expected to account for 88.4 percent of this volume. IDC's outlook for emerging market smartphone volume is 1.4 billion units by 2018, growing to 79.5 percent of worldwide volume.

"At the top, you still have Samsung and Apple, and I don’t expect that to change drastically. Beyond them, there’s lots of jockeying around for the remaining positions," Llamas said. "No surprise, a lot of those vendors are from China–Xiaomi, ZTE, Huawei, Lenovo and Alcatel, and then you have market stalwarts LG, Sony and Nokia in there too."

He said low-cost manufacturers benefit because they have the ability and intent to go low price–below $150, below $100 and even below $50 for a smartphone off contract.

"Not all global vendors are willing to do that over concern that there is little profit to be made. The question, then, is also of quality. Some vendors putting a smartphone at that price point have sometimes put out a less quality product, but customers are OK with that knowing that they only have to pay another $50 to get a new one," he said. "It’s easier economics for some users to go this route rather than pay $200 or more, like some phones by Android manufacturers or Apple."

Llmas said Apple doesn’t show signs of going that low, and already there is a burgeoning market for second-hand iPhones at lower prices.

Meanwhile, he notes that while Android vendors are all over the place, those local vendors with a keen eye to the local market have been able to stand out more compared to the global vendors.

"Margins shrink when going downstream, and Apple has been very successful at the high end instead," Llamas said. "I’m generally OK with this strategy considering how much money Apple makes, and for Apple to go lower, something from the hardware side is going to have to give, and by extension, something on the software side is also going to have to give. I don’t expect Apple to shortchange users in that regard."

The report also noted with the expected entry of Apple into the "phablet" market segment, and the pent-up demand for a larger-screen iPhone, Apple has the ability to drive replacement cycles in mature markets despite the slower growth seen in recent quarters.