China to Top the World’s Smartphone Market

W ith staggering consumer demand for affordable smartphones， China will claim as the world’s largest smartphone market this year and will also take over the US to be a state-level market with the largest mobile phone shipment across the world. According to the IDC’s Quarterly Report on Global Mobile Phone Market， this year China will possess a 26.5% portion in the world’s total smartphone shipment， and the US 17.8%.

The IDC’s Quarterly Report (Q2 of 2012) on China’s Mobile Phone Market， the Chinese mobile phone market saw a total shipment of around 86 million units in the single second quarter， up 10.4% year-on-year. It’s noteworthy that the shipment of smartphones rose 25.6% over the previous quarter， accounting for 51.3% of the total mobile phone market and exceeding that of the feature phones for the first time. This year， China’s smartphone shipment will reach 185 million units， almost double that in 2011 and thus China’s smartphone user base will definitely exceed 300 million， said Huo Jinjie， IDC’s vice president for Asia Pacific and general manager for China. IDC has also predicted that in 2016 the Chinese smartphone market will occupy a market share as high as 72% in the total mobile phone market.

“The Android smartphone， sold at a price lower than USD 200， will become a main force driving china’s future smartphone market. As the smartphone manufacturers are striving harder for market shares， the price of low-end smartphones will fall to below USD 100. The home-grown smartphones with operator subsidies will further attract more mobile phone users to turn to smartphones， which will push up the shipment of smartphones. Looking into the future， mobile phone users’ favoring over the 4G network in the later period will become another factor driving the smartphone market， said Wong Teck-Zhung， Senior Analyst of IDC Asia Pacific mobile market research.

“Looking at the region features， we predict that the smartphone demand will shift to the below 3rdtier cities. After continuous rapid growth， the smartphone market in the 1st-tier cities will slow down. On the contrary， as demand for low-price phone models and high-end models symbolizing elite status remains large， the smartphone market in the below 3rd-tier cities will accelerate to develop，” said Yan Zhanmeng， IDC China’s senior analyst in charge of mobile phone market research.

“As the smartphone shipmentt ramps up gradually， just like other traditional IT products， China’s smartphone market expanding beyond the 1st-tier cities will become a major force driving the smartphone market development. With a population accounting for 87% of China’s total， the 5th- and 6th-cities’ mobile phone markets are far from being saturated. Against the background that the Chinese smartphone market is fast expanding into the medium- and small-sized cities， nudging into the domestic 5th- and 6th-tier cities will become the key for the smartphone manufacturers to succeed，” added Wang Jiping， Deputy Director of IDC China’s Personal IT System Research Department.

“China’s smartphone shipment exceeding that of the US does not mean that the US smartphone market is stagnating. Taking up a considerable portion in the mobile phone shipment， the US smartphone market is likely to keep growing but at a slower speed. As there emerges a large number of new smartphone users and many a regular user hopes to upgrade their mobile phones， the smartphone market in the US still promises potential for growth，”said Ramon Llamas， IDC’s senior analyst in charge of mobile phone techniques and research projects on development trend.

“Apart from China and the US， some other countries may also emerge as the major players in the smartphone shipment market in the five years to come. As manufacturers are competing fiercely to expand customer base and market share， such fastgrowing countries as Brazil and Russia will become the most heated markets，” said Kevin Restivo， IDC’s senior analyst in charge of the project Report on the Global Mobile Phone Market.

China’s smartphone market commands this year the largest smartphone shipment across the world， and it will keep growing mainly in terms of low-price mobile phones. Although the large smartphone shipment is a piece of good news， this also means lower Average Sales Value (ASV)， slimmer profit and more throatcutting competition. During the prediction period， as the number of smartphone users multiplies in other emerging smartphone markets， the Chinese smartphone market will undoubtedly dominate a declining market share in the global smartphone market.

Due to mobile phone upgrading and feature phone users turning to smartphone， the US smartphone shipment is to pick up. In addition， the launching of low-price phone models， the widening coverage of the 4G network and the popularity of data sharing packages will drive up the number of smartphone users. Smartphone has become the first choice for the large-scale operators and in the mean time， regional and pre-charging operators are also competing to offer tailored service packages. With a relatively low popularity of smartphones in Asia Pacific，

the Indian smartphone market promises great potential for growth. The low-end smartphones， featuring double SIM cards and local applications and sold at around USD 100， will swiftly inject vigor into the Indian smartphone market. Despite the fact that the vast majority of Indian consumers cannot afford the expensive 3G packages， IDC has predicted that operators offering cheaper data service packages， considerable subsidies， services into the 2nd- and 3rdtier cities as well as the ever popularity of 3G and 4G will push up the user base of smartphones. Affordable service packages will become another significant factor driving up the number of Indian smartphone users.

Thanks to the strategic investments from mobile operators， smartphone manufacturers and the supervisory departments， the Brazilian smartphone market will keep expanding. Since operators focus on increasing Average Revenue per User (ARPU)， demand for smartphones will see a rise and the smartphone manufacturers also hope to gain more profits by offering such products. Meanwhile， the Brazilian government will exempt taxation over smartphones and will also protect the local manufacturing business from being impacted by overseas counterparts. The above-listed factors， coupled with steady enduser demand， will push up the smartphone shipment in the years to come.

Due to high subsidies offered by operators and a rise in long-term contracted users， the UK has become one of the fastest-growing smartphone markets in West Europe. During the prediction period， the offering of LTE and a package of new services attracting smartphone users， the shipment of smartphones will keep increasing. In addition， the declining HSPA equipment price will also attract feature phones users to turn to smartphones. In the later prediction period， however， as penetration into the smartphone market will become saturated and operators will begin to seek alternatives for subsidized models， growth in the smartphone market will slow down.