China will surpass the United States as the world's largest handset market by revenue in 2014, not just in volumes, according to a new report from research firm Strategy Analytics.
According to the research firm, total mobile phone sales--feature phones and smartphones--will hit 430 million units and generate revenues of $87 billion in China during 2014. In the U.S., total handset sales will stabilize at 163 million units and deliver revenues of $60 billion this year. Overall, mobile handset revenues are forecast to grow 13 percent globally during 2014.
In 2013, both the U.S. and China had around $57 billion in handset revenues.
Strategy Analytics expects total phone sales to grow 15 percent year-over-year in China and revenue to surge 53 percent. In contrast, in the U.S. mobile shipment volumes will be flat and revenue will inch up 4 percent, the firm predicted. The shift in China is being driven by the country's move to TD-LTE networks and more smartphones, which drives up average selling prices and revenue. Samsung Electronics, Huawei, Lenovo, ZTE, LG Electronics and others are moving aggressively to capitalize on those trends in China.
Still, as a more mature market, the U.S. does have advantages for handset makers. Customers are more familiar with smartphones and are willing to upgrade to smartphones, even though growth is falling off. LTE networks are also more mature and widely deployed, increasing the likelihood that customers will buy a more expensive LTE device.
"The United States is maturing and has now lost its crown to China as the world's largest mobile phone market by revenue," Strategy Analytics analyst Neil Mawston said. "However, it is important to remember the U.S. remains by far the mobile industry's most valuable country by profit. High average selling prices for mobile phones and huge operator subsidies from Sprint (NYSE: S) and others continue to make the U.S. a very profitable market for major device brands such as Apple (NASDAQ: AAPL), Samsung and Alcatel."
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