Low-cost Smartphones to Account for Nearly Half of Smartphone Shipments by 2018

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In many parts of the world smartphone shipments account for a larger percentage of mobile handset shipments than feature phones and low cost handsets. Yet within the smartphone class of devices segmentation is increasing to three price tiers (low mid and high).

Shipments of sub-US$250 low-cost smartphones will grow from 259 million in 2013 to 788 million in 2018, according to ABI Research. Mid (sub-$400) and high ($400+) cost smartphone shipments are expected to grow from 635 million to 925 million over the same period.

"As the feature phone segment continues to lose its battle for relevance, the low-cost smartphone has become the tool for operators seeking to drive increased data revenues," says senior analyst, Michael Morgan. The growth of smartphones in pre-paid and emerging markets will be the primary driver of low-cost smartphone growth. Developed and subsidized markets are also finding that low-cost smartphones can capture the remaining consumers that have yet to convert to a smartphone while minimizing the margin impacts stemming from subsidizing high-cost smartphones.

Mid- and high-cost smartphones will continue to play an important role for operators looking to seed their customer base with the most advanced smartphones. Premium smartphones tend to carry the most advanced wireless connectivity and operators who are upgrading their network want to ensure that the handsets running on their network can deliver the best possible experience and customer satisfaction.

"As smartphone penetration moves from early adopters to mass-market and laggard consumer segments, the smartphone as a product will be less dependent on technical superiority, and more dependent on reliability and value," adds senior practice director, Jeff Orr.

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