Smartphones costing $250 or less before carrier subsidies will make up 46 percent of all global smartphone shipments by 2018, up from 28 percent in 2012, according to a new report form ABI Research.
The report predicts that shipments of sub-$250 "low-cost" smartphones will grow from 259 million in 2013 to 788 million in 2018. ABI found that "mid-tier" (sub-$400) smartphone shipments and "high-end" ($400 and higher) smartphone shipments, combined, are expected to grow from 635 million to 925 million over the same period.
"As the feature phone segment continues to lose its battle for relevance, the low-cost smartphone has become the tool for operators seeking to drive increased data revenues," ABI analyst Michael Morgan said in a statement. ABI noted that smartphone penetration in traditional prepaid markets will continue to grow and that more established postpaid markets will see a surge in low-cost smartphones as carriers go after customers who have not yet converted from feature phones to smartphones.
The report is similar in many respects to one from Informa Telecoms & Media in December, though Informa was even more aggressive in its forecast of low-cost smartphone adoption. Informa predicted that low-end smartphones, those costing less than $150, will make up 52 percent of all smartphone sales in 2017.
ABI noted that mid-tier and high-end smartphones "will continue to play an important role for operators looking to seed their customer base with the most advanced smartphones." High-end phones tend to have the most advanced wireless connectivity features "and operators who are upgrading their network want to ensure that the handsets running on their network can deliver the best possible experience and customer satisfaction."
Other research firms have discussed the bifurcation of the smartphone market--the high and the low end, with the middle being squeezed. Informa believes that as this occurs, price erosion will loom as competition becomes more intense. A major consequence of the move toward low-end smartphones will be pressure on OEMs' profits--indeed firms like HTC are already reporting declining margins.
- see this ABI release
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