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Smartphone Markets: Worldwide Trends, Forecasts and Strategies 2012-2017

Affordability is vital in the effort to encourage non-smartphone owners to adopt smartphones.

The smartphone industry is set to change in 2013. Emerging Asia - Pacific will receive more smartphone shipments than Europe and North America combined in 2012. The smartphone market is changing from an elitist high-end device pool to a segmented mass-market ocean of handsets.

This Report provides:

  • the following forecasts for smartphones:
  • active SIMs
  • shipments by operating system (OS), by region and by handset manufacturer
  • by payment type (prepaid and contract).
  • profiles of the regional smartphone markets
  • detailed analyst views on Android, iOS, Windows Phone and other OSs
  • analysis of the average selling price of smartphones, and ARPU
  • details of the cost of owning an iPhone 5 by operator
  • smartphone retailing and pricing recommendations for operators
  • an impact assessment of smartphone app usage on operators and device vendors.

DATA COVERAGE

The Excel data annex provides the data behind the charts in the Report and the following data for mobile handset connections and shipments worldwide:

  • total handsets
  • smartphones
  • handset connections by technology
  • shipments by operating system

GEOGRAPHICAL COVERAGE

Data is provided for the following eight geographical regions:

  • Western Europe
  • Central and Eastern Europe
  • North America
  • Caribbean and Latin America
  • Developed Asia - Pacific
  • Emerging Asia - Pacific
  • Middle East and North Africa
  • Sub-Saharan Africa.

Data is provided for the following individual countries:

  • Austria
  • Belgium
  • Bulgaria
  • Croatia
  • Czech Republic
  • Denmark
  • Estonia
  • Hungary
  • Finland
  • France
  • Germany
  • Greece
  • Ireland
  • Italy
  • Latvia
  • Lithuania
  • Netherlands
  • Norway
  • Poland
  • Portugal
  • Romania
  • Russia
  • Slovakia
  • Slovenia
  • Spain
  • Sweden
  • Switzerland
  • Turkey
  • UK
  • Ukraine

COMPANY COVERAGE

The following companies are mentioned in this Report:

  • 3 Hong Kong
  • Acer
  • Alcatel Mobile Phones
  • AT&T
  • Apple
  • ASUSTeK Computer
  • Bouygues
  • CSL 1010
  • CSL one2free
  • Coolpad
  • Foxconn Electronics
  • Fujitsu
  • Google
  • HTC
  • Huawei
  • Hutchison
  • 3G UK
  • Lenovo
  • LG
  • M1
  • Micromax
  • Microsoft
  • Motorola
  • NEC
  • Netflix
  • Nokia
  • O2
  • Optus
  • Orange
  • Panasonic
  • Pantech
  • Research In Motion (RIM)
  • Samsung
  • SFR
  • Sharp
  • SingTel
  • Skype
  • Sony
  • Sony Mobile Communications
  • Spotify
  • Sprint
  • StarHub
  • T-Mobile
  • TCL
  • Telefonica Germany (O2)
  • Telefonica UK (O2)
  • Telstra
  • Verizon Wireless
  • Vodafone
  • Vodafone Hutchison
  • ZTE

About the author

Ronan de Renesse (Principal Analyst) is the lead analyst for Analysys Mason's Mobile Content and Applications and Mobile Broadband and Devices programmes. His primary areas of specialisation include rich media apps and services on mobile, application store forecasting, mobile broadband, tablets and smartphone adoption.

Ronan has been analysing the telecoms and media industry since 2003. Prior to joining Analysys Mason, Ronan was a Senior Analyst and the Head of Mobile at IHS Screen Digest, where he had overall responsibility for the Mobile Media Intelligence service and all related activities. For the past five years, Ronan has led the conception and development of various mobile media and technology forecasts, including those for mobile video, mobile music, mobile games, mobile applications, mobile broadband and smartphones.

Table of Contents

  • 7. Executive summary
  • 8. The smartphone market is changing, as vendors and operators begin to segment customers into three main sub-groups with different needs
  • 9. Smartphone penetration in the handset SIM base worldwide will more than double in the next 5 years, but will remain below 50%
  • 10. Apple's iOS and Google's Android will continue to dominate the worldwide smartphone market in the next 5 years
  • 11. Beyond the forecast: industry players face three key challenges in the smartphone market as handsets, usage and the ecosystem evolve
  • 12. Recommendations
  • 13. Recommendations for operators - capturing and retaining smartphone customers
  • 14. Recommendations for operators - monetising smartphone usage
  • 15. Recommendations for operators - managing smartphone ecosystems
  • 16. Recommendations for smartphone vendors - OS selection and multi-device ecosystems
  • 17. Recommendations for smartphone vendors - addressing commoditisation
  • 18. Worldwide smartphone forecasts and OS shares: Methodology and definitions
  • 19. Worldwide smartphone forecast 2012 - 2017: coverage and KPI definitions
  • 20. Geographical regions covered in this report
  • 21. High-level forecast methodology: meeting demand and supply assumptions for a more realistic view of the smartphone market
  • 22. Worldwide smartphone forecasts and OS shares: Demand-based shipment and active devices forecasts
  • 23. The smartphone share of active handset SIMs will grow to just under 50% by 2017 - 1.4 billion new smartphones will enter the market in that year
  • 24. Active smartphone SIMs are a better indication of the addressable smartphone user base for service providers than shipments
  • 25. 75% of smartphone shipments will be upgrades in 2017
  • 26. 62% of smartphones will use 4G networks in developed markets by the end of 2017
  • 27. Operators can use several levers to maximise 4G smartphone penetration
  • 28. Operators should think about five key priorities when trying to promote 4G adoption in their smartphone base
  • 29. Worldwide smartphone forecasts and OS shares: Regional splits
  • 30. Emerging Asia - Pacific will drive more than a third of smartphone demand by 2017
  • 31. Central and Eastern Europe will catch up with Western Europe in terms of penetration rates, during the forecast period
  • 32. Smartphone adoption will plateau in North America from 2017 onwards, with penetration flattening out at around 85%
  • 33. China will have over 200 million active smartphones by the end of 2012, despite low disposable income, no subsidies and limited 3G coverage
  • 34. Affordability will continue to hinder smartphone adoption in North Africa for the years to come
  • 35. Worldwide smartphone forecasts and OS shares: OS and vendor market shares
  • 36. Microsoft will ship almost as many Windows Phone units in 2017 as Apple will ship iPhones in 2012
  • 37. Chinese manufacturers will capture most of the growth from lower-end customers during 2012 - 2017, taking market share from other players
  • 38. Samsung will be the leading Android smartphone vendor throughout the forecast period, but only by a small margin
  • 39. Despite significant success, Android brings a level of fragmentation to the market, adding complexity to app development
  • 40. Windows Phone will be the fastest-growing OS in terms of shipments in the next 5 years
  • 41. Microsoft's Surface device range threatens Windows Phone partnerships
  • 42. Worldwide smartphone forecasts and OS shares: Smartphone commoditisation
  • 43. The average selling price of a smartphone declined by EUR300 from 2007 to 2011, which is threatening device profitability
  • 44. Android is the primary driver of smartphone commoditisation, as a growing number of vendors adopt the OS
  • 45. The response from competing OSs has been weak: Nokia's strategy is to push Symbian via low-end devices with content bundles
  • 46. Operator opportunities and challenges in the smartphone market: Capturing the next generation of smartphone users
  • 47. Smartphone sales have helped operators increase the proportion of customers on contracts in Europe
  • 48. Smartphone penetration among contract customers is reaching saturation in Europe; growth will come from the prepaid smartphone market
  • 49. Mobile content and apps are not necessarily the only drivers for smartphone sales
  • 50. Operator opportunities and challenges in the smartphone market: Lowering smartphone ownership costs: handset subsidies and financing plans
  • 51. Subsidies and creative tariff strategies are essential for driving high-end smartphone adoption and mobile data usage
  • 52. Variations in subsidies and packages mean the minimum cost of an iPhone 5 16GB varies between EUR700 (3HK) and EUR1840 (T-Mobile USA)
  • 53. The next generation of smartphone users will be less sensitive to device subsidies
  • 54. Operator opportunities and challenges in the smartphone market: Monetising smartphone users: mobile data pricing and 4G
  • 55. The greatest monetisation potential for operators in their smartphone user base is mobile data access
  • 56. Smartphones are great drivers of data consumption but the price per gigabyte is set to decrease threatening smartphone user monetisation
  • 57. If operators are to maximise smartphone monetisation, 4G adoption is paramount, but the value proposition is not always clear to consumers
  • 58. Operator opportunities and challenges in the smartphone market: Managing device and OS ecosystems
  • 59. Unlike other handsets, vendors and operators must provide smartphones with OS upgrades, which may have significant cost implications
  • 60. If a third OS gains enough traction to compete with Android and iOS, it can create opportunities for operators to support transitioning subscribers
  • 61. However, multi-device ecosystems will limit the number of transitions from one OS to another in the high-end customer segment
  • 62. About the author and Analysys Mason
  • 63. About the author
  • 64. About Analysys Mason
  • 65. Research from Analysys Mason
  • 66. Consulting from Analysys Mason

List of figures

  • Figure 1: Segmentation of the smartphone market beyond 2012, worldwide
  • Figure 2: Active handset SIMs by handset type and smartphone penetration, worldwide, 2009 - 2017
  • Figure 3: Smartphone shipments by OS, worldwide, 2007 - 2017
  • Figure 4: Regional breakdown used in this report
  • Figure 5: Schematic representation of the modelling methodology used for smartphone forecasts
  • Figure 6: Handset shipments by type, and smartphone penetration, worldwide, 2009 - 2017
  • Figure 7: Active handset SIMs by type, and smartphone penetration, worldwide, 2009 - 2017
  • Figure 8: Smartphone shipments by type of purchaser, and smartphone shipments per active handset SIM, worldwide, 2010 - 2017
  • Figure 9: Active smartphone SIMs by technology, and 4G penetration, developed markets, 2009 - 2017
  • Figure 10: 4G smartphone penetration - scenario-based modelling
  • Figure 11: Five priorities for operators trying to promote 4G smartphone adoption
  • Figure 12: Smartphone shipments by region, worldwide, 2010 - 2017
  • Figure 13: Active smartphone SIMs, and smartphone penetration, Europe, 2008 - 2017
  • Figure 14: Active handset SIMs by type, and smartphone penetration, North America, 2008 - 2017
  • Figure 15: Active smartphone SIMs, and smartphone penetration, Asia - Pacific, 2009 - 2017
  • Figure 16: Active handset SIMs by handset type, and smartphone penetration, Middle East and North Africa, 2008 - 2017
  • Figure 17: Smartphone shipments by OS, worldwide, 2007 - 2017
  • Figure 18: Share of smartphone shipments by handset vendor, worldwide, 2007 - 2017
  • Figure 19: Share of Android smartphone shipments by handset vendor, worldwide, 2011 and 2017
  • Figure 20: Share of Android devices that have accessed Google Play within a particular 14-day period, by version of Android
  • Figure 21: Windows Phone smartphone shipments, and growth rate, worldwide, 2011 - 2017
  • Figure 22: Microsoft's response to device vendors' ecosystems
  • Figure 23: Average selling price by handset category, top-10 handset vendors by volume of shipments, worldwide, 2007 - 2011
  • Figure 24: Number of Google Play-compatible device models1 by device manufacturer, worldwide, October 2012
  • Figure 25: Nokia handset shipments by type of handset, worldwide, 3Q 2012
  • Figure 26: Handset net additions by payment type, and smartphone penetration, Western Europe, 2006 - 2012
  • Figure 27: Smartphone net additions by payment type, Europe, 2009 - 2017
  • Figure 28: Reasons for not using mobile content and apps
  • Figure 29: Propensity to buy a smartphone of respondents who are not interested mobile content and apps
  • Figure 30: Minimum cost of owning an iPhone 5 16GB model over a 24-month contract, and corresponding service-related overhead, by operator, selected countries, October 2012
  • Figure 31: Handset users' preferences for subsidies and SIM-only offers when transferring from a non-smartphone to a smartphone
  • Figure 32: Distribution of monthly data traffic percentiles by smartphone operating system
  • Figure 33: Verizon Wireless's ‘Share Everything' subscription pricing, USA, July 2012
  • Figure 34: Advantages and disadvantages of different pricing strategies for 4G services
  • Figure 35: Share of Android OS versions and use of add-on apps among Android-user panellists, by handset vendor
  • Figure 36: The impact of a third OS on transitions between devices with different OSs
  • Figure 37: The future impact of device ecosystems on operators
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