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By 3 September 2012 | Categories: news

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Market analytics company IDC (International Data Corporation) has announced that China is poised to overtake the US as the number one smartphone market.

According to the analytics firm, strong end-user demand as well as an appetite for lower-priced smartphones will make the People’s Republic of China (PRC) the largest market for smartphones this year.

The latest data from the IDC’s worldwide quarterly mobile phone tracker service has revealed that China will account for more than one out of every four (26.5%) of all smartphone shipments during 2012, compared to 17.8% for the US.

This news comes in the wake of the IDC  recently lowering its PC outlook for this year as a result of PC shipments having declined during Q2 2012.

Budget Android devices driving growth in PRC

Wong Teck-Zhung, senior market analyst within the Client Devices division of IDC Asia/Pacific, stated that the PRC smartphone market will continue to be boosted by the low-end Android segment. Teck-Zhung said that prices in the low-end segment will drop from $200 (approximately R1 600) to $100 (around R840) and less as competition for market share heats up amongst smartphone vendors.

Beyond 2012 though, Teck-Zhung added that the move to 4G (LTE) networks will be another growth catalyst for the smartphone market.

According to the IDC, several other countries (besides China and the US) will emerge as key markets for smartphone shipment volume over the next five years. Kevin Restivo, senior research analyst with the IDC’s worldwide mobile phone tracker program said that high-growth nations the likes of Brazil as well as Russia, will become some of the most hotly contested markets, as vendors seek to capture new customers and market share.

Table: IDC worldwide mobile phone tracker 2012 Q2 forecast release
 
Top 5 markets for smartphone shipments

As it becomes the leading country for smartphone shipments this year, the PRC smartphone market will continue to grow, primarily on demand for lower-cost handsets, according to the IDC.  Over the course of the forecast, however, the firm said that China’s share of the global smartphone market will decline somewhat as smartphone adoption accelerates in other emerging markets.

Despite being relegated to second place, smartphone shipments into the United States will increase as users upgrade their devices and feature-phone users switch over to smartphones. Additionally, a combination of lower-priced models, expansion of 4G networks, as well as the proliferation of shared data plans will encourage continued smartphone adoption Stateside.

With smartphone penetration in India currently among the lowest in Asia/Pacific, this market has significant growth potential. According to the IDC, low-end smartphones offering dual-SIM capability, a high level of locally developed applications and budget devices (R1 600 and less) will rapidly boost the Indian smartphone market.

Smartphone growth in Brazil will be bolstered by strategic investments by mobile operators, smartphone vendors, and regulators. The IDC stated that the Brazilian government will offer tax exemptions for smartphones and protect local manufacturing against foreign vendors. These factors, combined with solid end-user demand, will drive smartphone volumes in the coming years.

The UK has been one of the fastest growing smartphone markets in Western Europe, driven by the high operator subsidies and long-term post-paid contracts. Over the forecast period, smartphone shipments will continue to grow on the back of the introduction of LTE (4G) and a new range of services that will appeal to heavy smartphone users.

Growth rates will slow in the later years of the forecast, due to smartphone penetration plateauing off and operators seeking out alternative subsidy models.
 
 
Chart: 2011, 2012 and 2016 Smartphone Shipment Market Share, Top 5 CountriesDescription: IDC's Mobile Phone Tracker Forecast is the market-leading forecast product designed for industry professionals, investors and governments seeking to capitalize on one of technology's most closely-watched markets. IDC forecasts 60 countries and 8 regions on a quarterly basis by Air Interface, Operating System and Device Type (feature phone + smartphone).Tags: Mobile Phone, Smartphone, Feature Phone, India, PRC, China, United Kingdom, Brazil, Mobile Phone Tracker, Forecast, Mobile Phone Tracker ForecastAuthor: IDCcharts powered by iCharts

“The fact that China will overtake the United States in smartphone shipments does not mean that the US smartphone market is grinding to a halt,” explained Ramon Llamas, senior research analyst with IDC’s mobile phone technology and trends program. “Now that smartphones represent the majority of mobile phone shipments, growth is expected to continue, but at a slower pace. There is still a market for first-time users as well as thriving upgrade opportunities.”

In related news, the IDC also recently revealed that Android and iOS reach new smartphone OS (operating system) record in Q2 2012, as 85% of all smartphones shipped during that period were powered by these two mobile platforms.

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