Demand is slowing for high-end devices following market saturation and consumers in emerging markets opting for cheaper models.
This report from the telegraph uk.
Despite sales of $293.9bn last year alone, analysts are predicting that sales of internet-enabled smartphones are likely to plateau following five years of extensive growth.
Michael Morgan, an analyst at ABI Research, told Bloomberg: “The days of great growth in the high end of the market are gone. It’s the Chinese companies who know how to survive on tiny margins that are ready for the fight that’s about to ensue.”
Over half of mobile phone users in the US own smartphones according to eMarketer, estimating that by 2017 49.3pc of the entire world will be using high-end mobile devices, compared to the current statistic of an estimated 21.3pc.
Such market dominance has caused the average price of a smartphone in the US to fall from $450 to $375. Revenue growth and profit margins are under threat after customers in emerging markets China and India have turned to cheaper alternatives.
Apple is expected to announce slowing iPhone sales on July 23, given that fiscal third-quarter revenue has remained largely unchanged for the past year. Future product launches including the latest iPhone and wearable wrist device dubbed the iWatch are unlikely to massively boost profits given that many consumers are content with their current handsets, analysts have said.
Meanwhile, IDC’s Restivo predicts that 66 per cent of the 384 million smartphones sold in China next year will cost under $130. Lower end manufacturers such as Huawei have met demand for capable, low cost devices that undercut Sony, Apple, HTC and BlackBerry significantly. Huawei made a record $3.7bn is sales during 2010, despite the fact many of its handsets cost under £100.
It is likely that the higher-end manufacturers will continue to cut prices and release cheaper handsets in an effort to up profits and maintain margins, with rumours of Apple releasing a budget iPhone with plastic casing retailing at $99 continue to circulate the internet.
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