Emerging markets to drive smartphone sales

Smartphones shipped globally will hit 1.7 billion in 2017, with emerging markets seeing particularly strong growth, predicts Ovum.

In a report Smartphone in Emerging Markets: Shifting Landscape, the independent telecom analyst firm finds that 450 million smartphones were sold in 2011, of which around 160 million were sold in emerging markets.

China alone accounted for around 66% of smartphones sold in emerging markets, and Ovum estimates that smartphone shipments could reach nearly 57% of total devices sold in emerging markets by 2017. As per a research done by another independent research firm CyberMedia, smartphone has seen a growth of 87% in 2011 over 2010 in India. In CY2011, 11.2 million smartphones were shipped to India.

Shiv Putcha, Ovum Principal Analyst, Telecoms Emerging Markets comments: “China is at the center of smartphone development and adoption in emerging markets, with the whole ecosystem increasingly geared toward the production of ever-more feature-rich affordable devices. This new wave of affordable smartphones will have a major impact on consumer choice in emerging markets.”

Smartphones have become cheaper, and a nascent entry-level segment is taking shape in the sub-$100 price band. However, affordability remains a big issue in most emerging markets.

Operator subsidies for smartphones are uncommon in emerging markets and this has hampered smartphone adoption. Major chipset and platform vendors such as Mediatek and Qualcomm are having a significant impact on both smartphone availability and affordability by offering reference designs to their device OEM partners and reducing barriers to entry.

Putcha notes: “While much of this development is occurring in China, local brands from other emerging markets are also adopting this model. Other emerging markets that will show strong growth include India and Indonesia, with Brazil and Russia following.”

“The growth of smartphones in emerging markets will see a corresponding growth in online services such as cloud, storage, and purchasing based on mobile money transactions. OEMs and equipment vendors will also increase their presence in online services.”

“However, mobile operators seeking to gain a slice of the growth in low-cost smartphones in emerging markets through white-labeled devices will struggle to gain traction in the market and achieve the same success as the more established brands,” concludes Putcha.