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The Smartphone Industry Is Doing The Talking In The Emerging Markets

|Includes:Apple Inc. (AAPL), BBRY, MSFT, NOK, SSNLF

In 2008, smartphones had a little share of 11% in the global cellphone industry. By 2012, the market for android phones boomed, with the market share of smartphones rising up to a good 44%. Statistics show that 1.7 billion phones were sold globally, out of which 712 million were smartphones. There is one key reason behind this- the emerging markets focus on price, since the consumers are price conscious. Rightly so, the consumers would always opt for an affordable smartphone, as the emerging markets are providing them with innumerous varieties.
According to the International Data Corporation (Pending:IDC), the cellphone market is expected to rise to another 7.3% in 2013. The reason behind this is simple- there is an ever increasing demand for smartphones. Hence, by 2017, smartphones are predicted to represent the global cellphone phenomena.
Smartphones are undergoing the cycle of revolution. They consist of high-resolution cameras, processors, camcorders, games, et al. They have become an easy medium of communication. However, as the market emerges, there is always room for innovation.
According to Canalys, phone shipments will decline in CAGR of -4% through 2016, whereas smartphones shipments will have a CAGR 17%. Considering the demand for smartphones is reaching the skies, analysis suggests smartphone shipments will exceed the one billion mark soon. In addition, the shipments are expected to grow 40% year-over-year (YoY).
Phablets and wearable technology are undergoing the initial stages of development. Wearable technology is rather interesting. It is technology and convenience in the form of wearable devices, with Samsung Galaxy Gear, a smartwatch, and Apple's iWatch, being the hottest additions. The phablet is a fusion of a phone and a tablet, with The Samsung Galaxy Note and the Sony Xperia Z Ultra as the latest in the phablet group.
The big players in the smartphone industry are Samsung and Apple. On the flip, Nokia and Blackberry also dominate a reasonable chunk of the market, while HTC is said to have growth potential.
Android bags the trophy with a dominant market share at 79%, beating Apple's Appstore, Windows and Blackberry. The consumer's buying preference fluctuates between price and apps. Presently, the Android Playstore is dominant in terms of innumerous interesting apps.
In 2012, 96% of the world population consisted of cellular subscribers, according to the International Telecommunication Union (ITU). This goes to show that subscriptions are increasing at a rapid pace. PortioResearch suggests that by 2016, subscriptions will be 8.5 billion. Hence, we are of the view that the emerging markets will be in the pockets of the smartphone industry.
Smartphones below $250 have a 49% market share, according to IDC. As the smartphone market continues to mature, the average selling price of smartphones is going down, from $443 in 2011 to $372 in 2013. It has been predicted that the prices will further decline and go down to $309 by 2017. However, the trend is growing strong as emerging markets are taking the biggest slice of the cake, i.e 65% of the total market. Growth of about 71% is expected by 2017, with China's market share predicted to be at 23%, and US at 14.5%.
Key players like Samsung and Apple are at the top of their game, with Samsung Galaxy Note 3, SmartWatch, Galaxy S4, iPhone 5c and 5s. However, low priced android phones stand tall, with 32% market share in China. It will be interesting to see how these companies move about in the near future. It is like the game of Chess, and there will be one winner. From what we analyze, those focusing on high quality and easy accessibility within a low price margin will dominate. The reason for this is that emerging markets are at a boom, with consumers wanting the best quality and high technology within a minimum price range.