Emerging markets will drive growth in worldwide smartphone shipments, with China surpassing United States to take over the lead in 2012, and India and Brazil entering the top five lists by 2016
In a statement released Thursday, IDC said the Chinese market had surpassed the U.S. in smartphone shipments for two consecutive quarters in the second half of 2011. This growth momentum will continue and help China grab "a slim lead" over the U.S. this year before widening the gap in coming years, said Wong Teck Zhung, senior market analyst of client devices at IDC Asia-Pacific.
"There will be no turning back in this leadership changeover," he said.
Ramon Llamas, the analyst firm's senior research analyst of mobile phone technology and trends, added in the satetement that emerging markets were becoming growth drivers for the global market because of their sheer size, strong demand, and healthy device replacement rate.
He said users in emerging markets looked for more than basic voice telephony functions, and smartphones offered the right platform for mobile entertainment, social networking and business usage in developing market.
TCO, data plans notable barriers
However, the emerging markets will face challenges. Llamas pointed to the total cost of ownership (TCO) which would remain a hurdle for potential smartphone buyers as smartphones still represent a significant investment for consumers in many countries.
Citing industry executives at the recent Mobile World Congress in Barcelona, the IDC analyst hightlighted the need for low-cost devices priced as low as sub-US$50.
He also noted that the cost of a monthly data plan as a barrier to wider smartphone adoption. "To realize the full potential of emerging markets, smartphone vendors need to develop low-cost smartphones that provide a full, robust experience, while mobile operators will need to creatively subsidize device cost and data plans," Llamas said.
In India, the smartphone market will witness swift growth over the forecast period, with carriers aggressively rolling out 3G networks and data plans. IDC noted that domestic vendors such as Micromax, Spaice, Karbonn and Lava had launched low-cost smartphones to drive future demand as they attempt to move up value chain from low-cost feature phones.
India's market growth last year had been driven by top-tier brands Samsung and HTC, and international vendors would look to invest more in local manufacturing in the coming years as the high-growth Indian market becomes a top priority.
G. Rajeev, senior market analyst for mobile devices at IDC India, added that demand for smartphones would grow as urban and enterprise users mature in their handset preferences and usage. He added that consumers were increasingly accustomed to higher data usage and using handsets for entertainment and other content, instead of just a communication device.
According to IDC, mature markets such as Japan, the United Kingdom and United States would still experience growth but volumes would not keep up with those of emerging markets.
It added that Android smartphones priced below US$200 was a popular segment in 2011, and expects these low-cost smartphones to remain a key growth driver, with prices becoming more affordable as chipset prices fall and market competition intensifies.
Wong explained: "Emerging domestic vendors will be another important engine of smartphone growth as giants Huawei, ZTE, and Lenovo continue to ramp up with big carrier orders due to their willingness to produce customized handsets. International players such as Samsung and Nokia are also expected to drive volume at the low end with cheaper smartphones."