1.7 billion smartphones worldwide in five years

BLOCKBUSTER NUMBERS: A woman checking her iPhone outside an Apple store in Beijing. China alone accounted for about 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. — Reuters

MELBOURNE: Smartphones shipped globally will hit 1.7 billion in 2017, with emerging markets seeing particularly strong growth, predicts Ovum. There are now more than 7 billion people in the world.

In a new report, the independent telecoms 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 about 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.

Shiv Putcha, Ovum principal analyst for telecoms emerging markets, said: “China is at the centre 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-US$100 (sub-RM300) 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, according to Ovum.

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.

“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,” Putcha said.

However, as China is driving smartphone adoption and development among emerging markets, many Chinese adjacent players, including Baidu and Alibaba, are aiming to leverage the opportunity that smartphones offer in terms of extending their online mobile services.

Virtually all of these players are using Android, but some of them are going a step further and customising Android to offer their own user interfaces, icons, and services, essentially replacing Google in the process.

Beyond simply launching new phones, according to Ovum, these vendors are innovating on the distribution side, with companies such as Xiaomi successfully focusing on online sales and services.

“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,” said Putcha.

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

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