Emerging markets put downward pressure on smartphone prices
Emerging markets are putting downward pressure on smartphone prices, as mobile users trade in their feature phones for smartphones, estimates market research firm IDC.
"Converting feature phone sales to smartphone sales implies a relentless push towards low cost," says Simon Baker, program manager for mobile phones at IDC CEMA. Nearly half of the mobile handsets sold across the world have retail prices of less than $100 without sales tax, with two-thirds of those having prices of less than $50, according to IDC figures.
India, for example, represents more than one-quarter of the global feature phone market, and nearly half of the smartphones shipped to the country last year cost less than $120 per phone.
Other emerging markets with high feature phone penetration include the Middle East and Africa, Central and Eastern Europe and Latin America. "This is a very big market opportunity. Some 660 million feature phones were shipped last year, which could add two-thirds to the size of the current global smartphone market," says Baker.
"The opportunity gets larger the lower the price falls. If you take retail prices without sales tax, in 2013 nearly three-quarters of the $100-$125 price tier was already accounted for by smartphones. Within $75-$100 the proportion was down to just over half, and between $50-$75 it was not much more than a third," Baker adds.
To compete in the lower-priced smartphone market, manufacturers have begun moving their manufacturing to countries with lower labor costs, such as Vietnam and Indonesia, IDC notes.
- check out IDC's release