A market research firm is predicting that more than 1.4 billion smartphones will be sold worldwide next year: an estimated 8 percent annual rise. But the company says it will be low-cost handsets in developing markets that will be the main driver.
According to Pyramid Research, only around 30 percent of smartphone handset sales next year will be in developed markets. (That’s a reference specifically to the phone industry in each country rather than wider economic wealth, though the two do often coincide.) The remaining 70 percent of sales will be in countries that currently have a relatively low take-up of smartphones, most notably in Latin America and Asia.
That’s bad news for the likes of Apple and Research In Motion as Pyramid notes that lower average incomes in these emerging markets means that price changes have a far more pronounced effect on sales. It’s predicting that the major factor next year on a global basis won’t be how many pixels the new iPhone has, but rather which companies can produce smartphones for no more than $150.
There are only two real ways that can happen. One is for a major change in the level of subsidy offered by phone networks, but in emerging markets that doesn’t seem viable: given the need for low monthly fees or pay-as-you-go (aka prepaid) service deals, networks would struggle to make back the money.
Instead it appears the goal will simply be making cheaper handsets, which is why Pyramid is tipping a great 2011 for Android. It’s also forecasting that Nokia’s Symbian system will have a steady take-up next year (as opposed to the slide of recent years), though is hesitant about saying that will be a long-term effect.
Another way of keeping costs down may simply be to cut the number of features available (while still qualifying as a smartphone): Pyramid argues that with children and retirees the groups with the most room to increase smartphone take-up, keeping things simple may pay off.