The smartphone of the future: Under $100, and everyone's device of choice

Consumers in developed economies are quickly fading as the dominant driver of smartphone trends.

The vast majority of smartphones bought in 2020 will cost below $100 as emerging economies become the dominant force in the market.

According to analyst firm Gartner, 78 percent of global smartphone sales will come from developing countries by 2018, helping the dominant price point in the next few years to become the below-$100 segment.

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Vendors are already starting to address the trend, through initiatives such as Google's recently launched Android One. The company has struck partnerships with Indian handset brands such as Karbonn to create sub-$100 devices using Android reference designs.

Microsoft, meanwhile, is also attempting to push Windows Phone 8 devices closer to the $100 mark while offering free versions of Windows to device manufacturers in emerging markets. Elsewhere, Mozilla hopes to do even better with ultra-budget Firefox OS smartphones, and Samsung is tackling the area through its own ongoing efforts to launch a Tizen line of lower-cost smartphones. Cyanogen Inc has also joined the fray, distributing its Android ROM on Micromax's new Yu line of smartphones for consumers in India.

As of the third quarter of this year, India had become the third largest smartphone market, behind China and the US, according to Strategy Analytics, which also predicts the most of growth in India will come from devices that retail for under $100.

The other big turning point last quarter was China's emergence as the world's top LTE handset market, out-sizing the US on long term evolution (LTE) for the first time. LTE growth in China was mainly driven by Oppo and Vivo, says Strategy Analytics.

Network equipment vendor Ericsson has also predicted massive growth in smartphone use by 2020, forecasting smartphone subscriptions will reach 6.1 billion by then, up from 2.7 billion today. It expects smartphone subscriptions to eclipse basic phone subscriptions by 2016.

With a growing base of users in developing markets that want a smartphone and data package, Gartner expects high-end shipments to such markets to slow down as fewer users see value in features they can offer.

It's also predicting an uptick in subsidies and sponsorships to increase, similar to those being developed by Opera, which allows carriers to sell targeted advertising to end-users in exchange for mobile data.

With the combined growth of smartphone usage in developing economies and saturation in developed economies, Gartner is predicting that by 2018 a tablet or smartphone will be the first device half of all users turn to for all online activities.

"The use pattern that has emerged for nearly all consumers, based on device accessibility, is the smartphone first as a device that is carried when mobile, followed by the tablet that is used for longer sessions, with the PC increasingly reserved for more-complex tasks," said Van Baker, research vice president at Gartner, in a statement.

"This behaviour will adapt to incorporate wearables as they become widely available for users. As voice, gesture and other modalities grow in popularity with consumers, and as content consumption tasks outweigh content creation tasks, this will further move users away from the PC," he said.

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