With total global trade revenues in excess of $100 billion in 2011 and 30% further growth expected in 2012, the smartphone market is on track to become the largest consumer electronics segment in 2012, exceeding that of televisions.
Looking to the wider market, total mobile handsets sales reached over 1.5 billion units last year and are anticipated to reach nearly 1.6 billion in 2012. Although standard feature phone sales are now in decline, they will still account for well over 50% of total handsets in 2012, driven by low pricing and continued demand amongst certain demographic groups and emerging markets, such as India, MEA and Latin America. Even by 2016, standard feature phones will account for over one third of the total handset market, with many consumers still only requiring handsets for basic calling and messaging functions.
This year, personal penetration of smartphones in a number of developed markets will exceed 50% and as much as 70% in the UK, as the devices become an increasingly important tool in the wider population’s everyday life.
In Japan, the smartphone market exhibited one of the highest rates of country growth, as more traditionally designed, high-end feature phones from local manufacturers faced increasingly significant competition from foreign vendors. Smartphone sales reached over 23 million units last year, over 150% growth on 2010, with Apple the major success story in the Japanese mobile sector in the last two years, amassing an installed base of almost 15 million devices by mid-2012.
Across the globe, smartphone market growth has been driven by a range of underlying factors, which will remain core for the foreseeable future and include strong Android and Apple device sales, the emergence of sub-$150 devices (which are helping pre-paid smartphone sales), the consumer’s desire to always be connected, strong operator and manufacturer marketing campaigns and the continuously improving range and quality of content and apps.
In particular, the emergence of lower priced smartphones will be increasingly important, particularly in emerging markets and amongst the youth sector, with Android devices driving this sector. However, competition is equally as intense in the higher end sector, where some manufacturers look to quad core processors to differentiate their devices in 2012. Futuresource estimates that over 65% of smartphones sold in 2012 will be sales to new users, with the remainder being replacement and upgrade sales. However, in developed markets such as the USA, this ratio is typically reversed, with replacement sales expected to account for two thirds of total sales in 2012.
