Wednesday, 29 January 2014

Smartphone sales pass 1bn in 2013 as China booms

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Dominated by Samsung and Apple, smartphones accounted for 55% of all mobile sales last year, but cheap rivals from China are changing the market

People try out Samsung Galaxy phones at the Samsung Electronics' headquarters in Seoul January 23, 2014. The South Korean company dominated the smartphone market.


People try out Samsung Galaxy phones at the Samsung Electronics' headquarters in Seoul January 23, 2014. The South Korean company dominated the smartphone market. Photograph: KIM HONG-JI/REUTERS
The smartphone market passed a key milestone in 2013, with 1bn devices sold during the year, according to the research company IDC - and other research companies gave almost identical figures.
Chinese vendors made significant inroads. Samsung and Apple topped the figures with 31.3% and 15.3% of fourth-quarter shipments, with Korean firm LG third with 4.8%. Huawei, Lenovo and ZTE were key players, taking nearly 15% of smartphone sales collectively.
More generally, smartphones are eating into the total mobile phone market, which totalled 1.82bn handsets in 2013, up just 4.8% from 1.74bn in 2012, said IDC. That means that smartphones made up 55% of all mobile phone sales in the year.
With growth accelerating, in the fourth quarter smartphones made up 58.2% of the 488.4m mobile sales, the research company said.
But the rapid expansion of smartphones to markets where featurephones have held sway has also created a huge market at the low end, while seeing saturation at the premium end where Apple in particular dominates. Its year-on-year phone sales growth in 2013 was just 12.9%, compared to smartphone sales growth for the year of 38.4%.
The figures suggest that Apple is increasing its share of the smartphone market against the context of total mobile phone sales that grew by 4.8%. That may be at the expense of featurephone makers - notably Nokia, which saw combined shipments of smartphones and featurephones for 2013 plummet by 25.2% from 335.6m to 251.0m.
Nokia's mobile phone division is being sold to Microsoft, which is trying to build a smartphone platform to compete with Google's Android and Apple's iPhone.

Metric choice

"Smartphone market share is a bullshit metric," commented Benedict Evans, telecoms and tech analyst at Enders Analysis, on Twitter. "Phone share matters. Smartphone share tells you nothing about Apple or Samsung's success."
Samsung shipped 313.9m smartphones by IDC's estimates, up 42.9% on 2012, while its total phone shipments grew 9.1% to 446.7m. As a proportion of all its phone shipments, its smartphone shipments rose from 53.6% to 70.3%, according to IDC's estimates.
Samsung does not provide official figures for smartphone or featurephone shipments.
However, the mobile phone business remains a brutal one for many companies. While Samsung and Apple have made huge profits in the past two years from smartphones, other companies have seen losses.
Even LG, which this week announced that it had surged back into contention with shipments of 13.2m smartphones in the fourth quarter, and 18.5m including featurephones, made an operating loss because of high marketing costs.

Chinese handset makers driving growth

The drive of smartphones to newer buyers in developing markets as prices of handsets plummets - driven by the huge growth of handset makers in mainland China - is changing the basis of competition, suggested IDC.
"Among the top trends driving smartphone growth are large screen devices and low cost," said Ryan Reith, program director with IDC's Worldwide Quarterly Mobile Phone Tracker.
"Of the two, I have to say that low cost is the key difference maker. Cheap devices are not the attractive segment that normally grabs headlines, but IDC data shows this is the portion of the market that is driving volume. Markets like China and India are quickly moving toward a point where sub-$150 smartphones are the majority of shipments, bringing a solid computing experience to the hands of many."
Smartphone sales volumes have doubled in just two years, from just under 500m in 2011; in 2010, they were fewer than 300m.

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