2013 Smartphone Market to See High Penetration, Cheaper Models

The 2013 global smartphone market will see high market penetration and popularly-priced products, according to Topology Research Institute, a Taiwan-based market research organization.

Kelly Hsieh, TRI manager, predicts some 1.86 billion mobile phones to be shipped worldwide in 2013, up 4.49% year on year, of which 860 million will be smartphones, for year-on-year increase of 26.47% and market penetration of 46.2%.

Asia will continue to lead North America as the world's largest market for smartphones in 2013, with China driving growth backed by its highest population, second-largest though slightly slowing economy but still simmering relative to the developed counterparts, rising per-capita income, expanding 3G network.

China's smartphone market sees emerging trend of high cost-to-performance ratio that is driven by vast demand and decreasing retail price, which is partly due to widened subsidies offered by China's top three telecoms—China Telecom, China Unicom and China Mobile—that apply to low-end smartphones, generic mobile phones, contracted branded products.

Hsieh projects smartphone sales in China to rise 36.2% to 256 million units in 2013 from an estimated 188 million in 2012.

The TRI says surging demand and vigorous promotion by China's telecoms have drawn more players to the low-priced smartphone market, in which competition has intensified especially after rollouts of Net-accessible phones.

Downtrending Prices

A market flooded with players will suppress retail prices of smartphones in China to render profitless Internet-enabled handsets. Citing sliding prices of handsets and continuous drop in smartphone chips, Topology feels that sub-US$100 smpartphones will inevitably appear in 2013, which will also motivate more 2G handset users to trade up to 3G phones.

Hsieh thinks Taiwan's contract manufacturers are likely to benefit from such price declines of handsets, as brand-name suppliers will be driven to seek quality contract manufacturers with cost advantage.

Integrated chip (IC) technology has also emerged as another trend alongside low-priced smartphones, with phone makers in China using off-the-shelf ICs incorporating application processing and baseband ICs, of which popular models being MediaTek Inc.'s MT6575 and Qualcomm Inc.'s MSM7227A.

Lower-priced smartphones drive major smartphone makers to cooperate with handset-chip makers, whose integrated ICs help handset makers compete with enhanced cost efficiency. Such collaborations and vigorous deployment of 4G systems worldwide will likely further popularize smartphones to create business opportunities for software developers.

More 4G Phones

In the high-end market, smartphone heavyweights will release more phones next year with 4G Long Term Evolution (LTE) technology, which is also installed in mid-range phones, suggesting rising LTE shipments in 2013.

Hsieh believes major chip vendors like Qualcomm will release integrated LTE chips combining 3G/4G baseband ICs with ARM-licensed processor in 2013 for LTE smartphones and tablet PCs, noting although most of LTE smartphones currently are Internet enabled, they have individual 3G and 4G baseband chips to support voice technology High Speed Packet Access or Evolution Data Only.

Eventually smartphones will be used by consumers for cloud services, enabling file transmission at high speed, also driving up quality and quantity of value-added mobile services.

Source: Topology Research Institute