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China beats U.S. as world's largest smartphone market

Posted: 12 Sep 2014 ?? ?Print Version ?Bookmark and Share

Keywords:smartphone connections? developing world? Asia Pacific?

China ranks as the largest smartphone market globally with more than 692 million smartphone connections, surpassing the United States (197 million), Brazil (142 million), India (111million), and Indonesia (95 million), according to a new study by GSMA.

China's record boosted the Asia Pacific total, which accounted for about half of global smartphone connections, even though penetration in the region is currently calculated at below 40 per cent, the report said.

The study "Smartphone forecasts and assumptions, 2007-2020" also stated that the developing world overtook the developed world in terms of smartphone connections in 2011 and today accounts for two in every three smartphones on the planet. It is predicted that by 2020, four out of every five smartphone connections worldwide will come from the developing world.

By 2020, smartphones will account for two out of every three mobile connections globally. The new study finds that smartphones account for one in three mobile connections today, representing more than two billion mobile connections. It forecasts that the number of smartphone connections will grow three-fold over the next six years, reaching six billion by 2020, accounting for two-thirds of the nine billion mobile connections by that time.

Basic phones, feature phones, and data terminals such as tablets, dongles, and routers will account for the remaining connections. The study excludes M2M from the connections totals.

"The smartphone has sparked a wave of global innovation that has brought new services to millions and efficiencies to businesses of every type," said Hyunmi Yang, Chief Strategy Officer at the GSMA. "As the study released ... shows, smartphones will be the driving force of mobile industry growth over the next six years, with one billion new smartphone connections expected over the next 18 months alone."

In many developed markets, smartphone penetration is approaching the 70 to 80 per cent 'ceiling' at which growth tends to slow. According to the report, smartphone adoption is forecast to reach 75 per cent in Europe and North America by 2020. Smartphone growth in these two regions has slowed in recent years; smartphone connections grew by 35 per cent in North America and by 39 per cent in Europe between 2010 and 2013, compared to growth rates of over 80 per cent during the period in Asia Pacific and Latin America.

Factors driving the smartphone market

The new GSMA Intelligence report highlights a number of factors influencing growth in the global smartphone market, and they are as follows:

  • Rapid erosion of the Average Selling Price (ASP) of smartphones is accelerating user migration from basic and feature phones to smartphones.
  • Demand for low-end smartphones is driving volume growth, with sub-$50 smartphones becoming a reality.
  • Operator-branded smartphones sold via operator retail channels is a key trend driving the low-end segment.
  • Operator subsidies continue to play an important role in driving the adoption of high-end devices, but are being scaled back at lower price tiers.
  • The availability of 4G-LTE smartphones is influenced by the pace of allocation and assignment of 4G spectrum by regulators around the world.
  • The availability of 'data-centric' services and tariffs is fuelling the adoption of smartphones in both developed and developing economies.
  • In the developing world, smartphone adoption is linked to the availability of data tariffs tailored for cost-conscious prepaid consumers.
  • Smartphone growth is negatively impacted by taxation imposed on devices by governments, especially in price-sensitive developing economies.
  • In the developing world, there is a correlation between an increase in smartphone adoption and an increase in mobile broadband connections.

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