Oct 28, 2013 04:52 PM EDT
Opportunities and growth indicators are coming from Android’s low-end smartphone market. Android is still the leading device operating system (OS) in 2013, accounting for 38 percent of shipments. According to Gartner, “Tablet Shipments Increase 53.4 Percent, “Worldwide combined shipments of devices (PCs, tablets and mobile phones) are projected to reach 2.32 billion units in 2013, a 4.5 percent increase from 2012. The market is being driven by a shift to lower-priced devices in nearly all device categories.” The report this month indicated Android will lead the trend as number one in low-end smartphone market growth leaving Apple far behind at number three. The demand for low-end smartphone’s is expected to rapidly take off in emerging countries such as Brazil, China and India.
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Smartphone market competition is heating up in the developing world with new devices brought to market such as Android 4.4 KitKat. Google’s technology disruption plans within the low-end smartphone market is aimed to gain more than 75% of market share with Android 4.4 KitKat influencing further diversity in Google’s device offerings. 1 in every 3 Chinese consumers will purchase a smartphone in 2014. China’s total mobile phone shipments have reached 110 million in Q2 2013. Smartphone shipments, a subset of mobile phone shipments, reached 86 million, growing by 10% on a quarterly basis, according to IDC. Market share in China and India alone is well over 90%.
Android is poised to remain a market leader. Android 4.4 smartphones which are lower in cost are aimed to gain big wins over its consumers. With many versions of Android’s low cost smartphone now on the market, consumers can benefit from many areas such as low cost, lower resolution displays, minimal data speeds and smaller memory.
Worldwide Device Shipments by Operating System (Thousands of Units)
Source: Gartner (October 2013)
There are questions if Apple has the ability to sustain growth only within the premium market. Challenges could surface within the U.S and Europe as manufacturers experience a saturation point. Manufacturers would then tend towards a more innovative paradigm for premium approaches such as modular devices and smartwatches. The high end smartphone market now appears to be diminishing. Carolina Milanesi, research vice president at Gartner recently stated "While consumers will be bombarded with ads for the new ultramobile devices, we expect their attention to be grabbed but not necessarily their money," "Continuing on the trend we saw last year, we expect this holiday season to be all about smaller tablets as even the long-term holiday favorite — the smartphone — loses its appeal.” The current smartphone margins appear very small with Android being a top leader dominating the market. This makes for smaller companies entering the market to be a serious challenge with trying to outpace larger rivals.
Android is the leading global smartphone device operating system (OS). While low-end smartphones may be less glamourous, the market is proving it is rather very lucrative for Android. The present market demand for smartphones under $200 is substantial. There are many Android consumers who simply require internet access, to view videos or play video games from a smartphone. It is no doubt that low cost smartphones are poised to dominate in emerging markets. For competitors such as Apple, they are left with the downsides of eroding margins and an oversaturated premium market for smartphones. The days of high average selling price (ASP) smartphones are now coming to end.
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