analysys mason smartphone forecasts worldwide may2014 rdmd0 toc

Analysys Mason Limited 2014

Smartphone markets: worldwide trends, forecasts and strategies 20142018

Research Forecast Report

Smartphone markets: worldwide trends, forecasts

and strategies 20142018

May 2014

Ronan de Renesse



About this report

This report provides:

a 5-year forecast of the installed base and sales demand

for smartphones

a detailed 5-year forecast of smartphone connections by

operating system (OS) for France, Germany, Spain, the UK

and the USA

an in-depth analysis of the trends, drivers and inhibitors for

the adoption of smartphones, and the strategies that

players are adopting to expand smartphone adoption

a comparative SWOT analysis for the top-eight smartphone

manufacturers in the world (by number of device sales), as

well as Google and Microsoft

key implications and recommendations for mobile

operators and vendors.

We define smartphones as mobile handsets that have the characteristics of a PC, including advanced multimedia

capabilities and the ability to install third-party software. Our

definition excludes Symbian Series 40 devices.

This report draws on Analysys Masons regional forecasts and interviews with regional operators and smartphone

vendors.

2

Geographical coverage Major KPIs Key companies or

operators discussed

Regions modelled:

North America (NA)

Western Europe (WE)

Central and Eastern Europe (CEE)

Developed AsiaPacific (DVAP)

Emerging AsiaPacific (EMAP)

Latin America (LATAM)

Middle East and North Africa (MENA)

Sub-Saharan Africa (SSA)

More information on

country-level coverage is

provided in the Market definition section of this report

Smartphone connections

Non-smartphone connections

Smartphone unit sales

Non-smartphone unit sales

Apple

Google

HTC

Huawei

Lenovo

LG Electronics

Microsoft

Nokia

Sony Mobile

Samsung

Figure 1: Summary of report coverage [Source: Analysys Mason, 2014]



Contents [1]

7. Executive summary

8. Executive summary: Improving customer loyalty via stronger device

ecosystems will help vendors sustain their market share

9. Key implications

10. Key implications

11. Forecasts and analysis: worldwide

12. Smartphones share of handset connections will not exceed 50% until 2018

13. Almost 40% of non-smartphone users in developed markets are not

really interested in smartphones

14. 18% of mobile respondents will not convert to smartphones unless their

phone breaks

15. 2014 will be a pivotal year for vendors as the high-end smartphone

market reaches saturation in developed countries

16. OS worldwide market shares: Android will maintain its comfortable lead,

with a 72% volume market share in 2018

17. Analysis: Apple and iOS

18. Analysis: Google and Android

19. Analysis: Windows Phone

20. Vendors worldwide market shares: Samsungs market share of unit sales will decline from 32% in 2013 to 27% in 2018

21. Vendor analysis: HTC

22. Vendor analysis: Huawei

23. Vendor analysis: Lenovo

24. Vendor analysis: LG Electronics

3

25. Vendor analysis: Nokia

26. Vendor analysis: Samsung

27. Vendor analysis: Sony Mobile

28. Forecasts and analysis: regional

29. Worldwide view: Latin Americas contribution to the smartphone market will increase the most during the forecast period

30. North America: Operators have been particularly successful at

converting prepaid and other low-end customers to smartphones

31. Western Europe: Making smartphones more affordable via financing

plans and refurbished handsets will help maximise smartphone

penetration

32. Central and Eastern Europe: The region will have almost as many

smartphone connections and sales as Western Europe by the end of

2018

33. Developed AsiaPacific: 96% of handset sales will be smartphones in 2018

34. Emerging AsiaPacific: 47% of connections will be smartphones by 2018, and the market will continue to grow steadily beyond the forecast

period

35. Latin America: The region is set to overtake North America in yearly

smartphone unit sales by the end of 2015

36. The Middle East and Africa: Strong demand for OTT communication

apps is driving smartphone take-up

37. Sub-Saharan Africa: The average selling price for smartphones will

remain high in comparison with income levels and ARPU

Slide no. Slide no.



Contents [2]

38. Forecasts and analysis: country-level

39. France: Androids market share will decline by 8 percentage points during the forecast period because of a high-end-focused market

40. Germany: Low ARPU and a relatively high share of prepaid connections

will continue to drive low-end Android smartphone adoption

41. Spain: Android smartphones will account for three out of four

smartphone connections in 2018

42. UK: Windows Phone will gain users from BlackBerrys user base

43. USA: This is the only market we tracked in which iOSs market share will continue to grow during the forecast period

44. Market definition

45. Definition of geographical regions [1]

46. Definition of geographical regions [2]

47. About the author and Analysys Mason

48. About the author

49. About Analysys Mason

50. Research from Analysys Mason

51. Consulting from Analysys Mason

4

Slide no.



List of figures [1]

Figure 1: Summary of report coverage

Figure 2: Smartphone unit sales by device manufacturer, worldwide,

20112018

Figure 3: Mobile handset connections by type, and smartphones share of connections, worldwide, 20112018

Figure 4: Propensity to buy a smartphone, 2011 and 2012

Figure 5: Primary reasons for getting a new handset, by type of device

currently owned

Figure 6: Mobile handset unit sales by type, and smartphones share of unit sales, worldwide, 20112018

Figure 7: Smartphone unit sales by operating system, worldwide, 20112018

Figure 8: Smartphone unit sales by device manufacturer, worldwide,

20112018

Figure 9: Smartphone connections by region, 20112018

Figure 10: Smartphone unit sales by region, 20112018

Figure 11: Smartphone connections, share of total connections and year-on-

year growth, North America, 20112018

Figure 12: Smartphone unit sales, year-on-year growth and as a share of total

handset sales, North America, 20112018


year growth, Western Europe, 20112018


handset sales, Western Europe, 20112018


year growth, Central and Eastern Europe, 20112018

5


handset sales, Central and Eastern Europe, 20112018


year growth, Developed AsiaPacific, 20112018


handset sales, Developed AsiaPacific, 20112018


year growth, Emerging AsiaPacific, 20112018


handset sales, Emerging AsiaPacific, 20112018


year growth, Latin America, 20112018


handset sales, Latin America, 20112018


year growth, Middle-East and North Africa, 20112018


handset sales, Middle-East and North Africa, 20112018


year growth, Sub-Saharan Africa, 20112018


handset sales, Sub-Saharan Africa, 20112018

Figure 27: Smartphone connections by operating system, and smartphones share of total mobile handset connections, France, 20112018

Figure 28: Smartphone connections by operating system, and smartphones share of total mobile handset connections, Germany, 20112018



List of figures [2]

Figure 29: Smartphone connections by operating system, and smartphones share of total mobile handset connections, Spain, 20112018

Figure 30: Smartphone connections by operating system, and smartphones share of total mobile handset connections, UK, 20112018

Figure 31: Smartphone connections by operating system, and smartphones share of total mobile handset connections, USA, 20112018

Figure 32: Regional breakdown used in this report

Figure 33: Regional breakdown used in this report

6



Smartphones share of handset connections will not exceed 50%

until 2018

The number of smartphone connections is set to grow by 136% in the next 5 years to reach 3.9 billion connections

worldwide in 2018. 2.2 billion smartphone connections will be

added during the forecast period.

Smartphones share of handset connections will only reach 52% in 2018, so non-smartphones will continue to be the

dominant device category on operators networks for the next 4 years. The gap between mature and developing markets

will widen in the next 2 years, as some countries approach

saturation, while in others the smartphone market is only

nascent. Operators and vendors with a worldwide footprint

will need to adopt differentiated strategic planning to

accommodate this trend.

Operators need to maximise smartphone penetration to drive handset ARPU growth. They can boost take-up by:

making smartphones more affordable by offering

subsidies, financing and own-branded low-end models1

using application-based pricing for example, subsidising access to popular apps such as Facebook and Google can

be a great incentive for a customer to convert to a

smartphone.2

12

Figure 3: Mobile handset connections by type, and smartphones share of connections, worldwide, 20112018 [Source: Analysys Mason, 2014]

1 See Analysys Masons Viewpoint Operator subsidy strategies and alternative ways of making

smartphones affordable. Available at www.analysysmason.com/smartphone-subsidy-Jan2014.

2 See Analysys Masons Viewpoint Application-based pricing: opportunities, business models

and case studies. Available at www.analysysmason.com/ABP-2013.

0%

10%

20%

30%

40%

50%

60%

0

1

2

3

4

5

6

7

8

201

1

201

2

201

3

2014

201

5

201

6

201

7

2018

Pe

rce

nta

ge

of

ha

nd

se

t co

nn

ectio

ns

Con

ne

ctio

ns (

bill

ion

)

Non-smartphones Smartphones

Smartphones' share



2014 will be a pivotal year for vendors as the high-end smartphone market

reaches saturation in developed countries

We expect smartphone sales to continue to grow throughout the forecast period as smartphone adoption increases in

developing markets and shorter replacement rates in

developed markets drive smartphone demand.

The number of smartphones sold exceeded the number of non-smartphones sold for the first time in 2013. Sales figures

(see Figure 6) are more representative of the vendor context

than the number of connections. Smartphone sales are

starting to saturate in the most-advanced markets, such as

North America, Western Europe and Developed AsiaPacific, further intensifying competition among smartphone vendors.

The high-end segment of the smartphone market is already saturated. 2014 will be a pivotal year for the most-exposed

vendors, which will have to turn to lower-end segments for

growth. Smaller vendors such as BlackBerry and HTC are

simply too small to manage and fund such drastic strategy

changes and may be subject to market consolidation instead.

In developed countries, we expect most smartphone sales to come from smartphone-to-smartphone replacements, rather

than non-smartphone-to-smartphone replacements, which

emphasises the importance of smartphone user retention

strategies for vendors and service providers.

15

Figure 6: Mobile handset unit sales by type, and smartphones share of unit sales, worldwide, 20112018 [Source: Analysys Mason, 2014]

0%

10%

20%

30%

40%

50%

60%

70%

80%

0.0

0.5

1.0

1.5

2.0

2.5

201

1

201

2

201

3

201

4

201

5

201

6

2017

2018

Pe

rcen

tage

of

un

it s

ale

s

Unit s

ale

s (

bill

ion

)

Non-smartphones Smartphones

Smartphones' share



About the author

Ronan de Renesse (Principal Analyst) is the lead analyst for Analysys Masons Mobile Devices and Digital Economy research programmes. His primary areas of specialisation include smartphone and tablet adoption, rich

media applications and services on mobile, mobile content and data monetisation, and over-the-top (OTT) company

strategies.

Ronan has been analysing the telecoms and media industry since 2003. Prior to joining Analysys Mason, Ronan

was a Senior Analyst and the Head of Mobile at IHS Screen Digest, where he had overall responsibility for the

Mobile Media Intelligence service and all related activities. For the past 5 years, Ronan has led the conception and

development of various mobile media and technology forecasts, including those for mobile applications, mobile

broadband and smartphones. Ronan has also written thought-leadership reports on Facebook and Google's mobile

strategies, and participated in the production of Analysys Mason's key primary research projects such as the

Connected Consumer, Tablet survey and Consumer smartphone usage report series.

Before becoming an industry analyst, Ronan was an academic researcher at the Centre for Telecommunications

Research at King's College London. He had numerous articles published in international technology journals and

also gave various presentations at high-profile conferences. Ronan holds a PhD in Telecommunications from King's

College London. He has also participated on the GSMA Global Mobile Awards judging panel.

48



About Analysys Mason

Knowing whats going on is one thing. Understanding how to take advantage of events is quite another. Our ability to understand the

complex workings of telecoms, media and technology (TMT) industries and draw practical conclusions, based on the specialist

knowledge of our people, is what sets Analysys Mason apart. We deliver our key services via two channels: consulting and research.

49

Consulting

Our focus is exclusively on TMT.

We support multi-billion dollar investments, advise clients on regulatory matters, provide spectrum valuation and auction support,

and advise on operational performance, business planning and strategy.

We have developed rigorous methodologies that deliver tangible results for clients around the world.

For more information, please visit www.analysysmason.com/consulting.

Research

We analyse, track and forecast the different services accessed by consumers and enterprises, as well as the software, infrastructure

and technology delivering those services.

Research clients benefit from regular and timely intelligence in addition to direct access to our team of expert analysts.

Our dedicated Custom Research team undertakes specialised and bespoke projects for clients.

For more information, please visit www.analysysmason.com/research.



Research from Analysys Mason

We provide dedicated coverage of developments in the telecoms, media and technology (TMT) sectors,

through a range of research programmes that focus on different services and regions of the world.

50

Alongside our standardised suite of research programmes, our Custom Research team undertakes specialised, bespoke research

projects for clients. The dedicated team offers tailored investigations and answers complex questions on markets, competitors and

services with customised industry intelligence and insights.

To find out more, please visit www.analysysmason.com/research.



Consulting from Analysys Mason

For more than 25 years, our consultants have

been bringing the benefits of applied intelligence

to enable clients around the world to make

the most of their opportunities.

51

Our clients in the telecoms, media and technology (TMT)

sectors operate in dynamic markets where change is

constant. We help shape their understanding of the future

so they can thrive in these demanding conditions. To do

that, we have developed rigorous methodologies that

deliver real results for clients around the world.

Our focus is exclusively on TMT. We advise clients on

regulatory matters, help shape spectrum policy and develop

spectrum strategy, support multi-billion dollar investments,

advise on operational performance and develop new

business strategies. Such projects result in a depth of

knowledge and a range of expertise that sets us apart.

We help clients solve their most pressing problems,

enabling them to go farther, faster and achieve their

commercial objectives.

To find out more, please visit

www.analysysmason.com/consulting.



Published by Analysys Mason Limited Bush House North West Wing Aldwych London WC2B 4PJ UK

Tel: +44 (0)20 7395 9000 Fax: +44 (0)20 7395 9001 Email: [email protected] www.analysysmason.com/research Registered in England No. 5177472

Analysys Mason Limited 2014. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher.

Figures and projections contained in this report are based on publicly available information only and are produced by the Research Division of Analysys Mason Limited independently of any client-

specific work within Analysys Mason Limited. The opinions expressed are those of the stated authors only.

Analysys Mason Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the normal UK

publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark.

Analysys Mason Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Mason Limited shall not be under any liability for loss or

damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the customer, his servants, agents or any third party.

analysys mason smartphone forecasts worldwide may2014 rdmd0 toc

Documents

vendor analysis

smartphone vendors

smartphone adoption

report smartphone connections

smartphone manufacturers

indepth analysis

nonsmartphone users

worldwide trends