IDC: Windows Phone won't surpass 10% market share until 2017


Microsoft's (NASDAQ:MSFT) Windows Phone will solidify its position as the world's third-leading smartphone operating system over the next several years but will continue to trail significantly behind Google's (NASDAQ:GOOG) Android and Apple's (NASDAQ:AAPL) iOS, research firm IDC forecasts.

Windows Phone will capture 10.2 percent of the worldwide smartphone market in 2017, increasing from 3.9 percent in 2013, IDC said. "With the acquisition of Nokia's (NYSE:NOK) device and services unit, Microsoft will increasingly need to drive share gains by itself as OEM support for Windows Phone is expected to wane now that the company is set to become a full-fledged hardware maker," IDC said. "Microsoft will also need to ship more low-cost smartphones to high-growth emerging markets if it is to continue building on its recent nominal share increases."

Microsoft acquired Nokia for $7.2 billion, the companies announced Tuesday morning. Nokia adopted Windows Phone as its primary smartphone platform in early 2011: Sales of Lumia devices increased 112.7 percent year-over-year during the second quarter of 2013 to account for 80 percent of Windows Phone 8 handset sales worldwide, according to Gartner data. In a conference call Tuesday, Microsoft said it anticipates Windows Phone will represent 15 percent of the global smartphone market in 2018, generating estimated annual revenues of $45 billion.

Android will remain the unquestioned segment leader throughout the forecast period, although IDC believes the Google OS will slide from a 2013 market share of 75.3 percent to 68.3 percent in 2017 as the market matures and competition solidifies. "The sheer volume of devices at a wide range of price points combined with Google's backing and a growing application library will keep Android atop the smartphone OS heap," the firm said. "Samsung remains the world's top seller of Android-based smartphones, while the resurgence of LG and Sony have also contributed to its success in recent quarters."

iOS will also hold firm in second place, increasing from 16.9 percent worldwide market share this year to 17.9 percent in 2017. IDC attributes its growth to the expected launch of a lower-cost iPhone that will open up a wider addressable market. "Apple will also grow faster in subsequent forecast years due to enterprise and emerging market share gains that will be driven in part by a likely deal with China Mobile, which will give it greater reach into one of the world's fastest-growing smartphone markets," IDC stated. "iOS share gains will be tempered by the relatively high price points of the iPhone, which makes for a lower share ceiling."

BlackBerry (NASDAQ:BBRY) will fade from 2.7 percent this year to 1.7 percent in 2017, a slide IDC blames on tepid consumer reaction to its overhauled BlackBerry 10 OS and increasing competition in longstanding market bastions like Africa, Latin America, and the Middle East. BlackBerry recently said its board of directors has formed a special committee to explore its strategic alternatives, including a possible sale.

IDC expects the worldwide mobile phone market to grow 7.3 percent year-over-year in 2013, rebounding from 2012 growth of just 1.2 percent. Vendors are on pace to ship more than 1.8 billion mobile phones this year, a number expected to eclipse 2.3 billion in 2017. Worldwide smartphone shipments are forecast to grow 40 percent year-over-year to surpass 1 billion units this year.

"Smartphones will represent virtually all of the mobile phone market in many of the world's most developed economies by the end of 2017," said Kevin Restivo, Senior Research Analyst with IDC's Worldwide Mobile Phone Tracker program. "Aggressive carrier subsidies of handsets, falling prices, higher consumer awareness, and a vast array of devices will mean almost all phones shipped to the developed world will be 'smart.' However, smartphone shipment volume will be dominated by emerging markets, such as China, even though the percentage of smartphones to feature phones won't be as high."

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