Low Priced Smartphones To Generate 40% of unit sales by 2020
The rate at which people are buying smartphones is increasing at a very high rate giving tech companies an opportunity to up their game in phone production. In Kenya the mobile and internet penetration are among the highest in Africa at 83% and 58% respectively of the 44.35 million population. And a burgeoning middle class today makes up 22% of the country’s population according to Jumia. The estimated number of internet users stands at 26.1 million, making Kenya the 21st most connected population in the world.
Total handset sales are expected to grow from 1.88 billion to 2.16 billion units between 2014 and 2020, at a compound annual growth (CAGR) rate of 2.4 per cent. The forecast was done by the independent telecoms analyst firm Ovum.
Smartphones will comprise 95% of global handset sales by 2020, up from 65% in 2014, and will first exceed 2 billion unit sales in 2020. Android and iOS devices will continue to lead the market with 80% and 14% smartphone volume market share respectively in 2020, almost identical to 2014. Handsets based on Microsoft’s Windows Phone OS will capture most of the remaining market with a 4.2% market share in 2020, equivalent to 86 million unit sales.
Africa and the Middle East and Latin America will lead the smartphone market in terms of growth over the next six years with a CAGR of 17% and 11% respectively, reaching a combined 576 million units sales by 2020, up from 254 million in 2014. In Asia Pacific, the Chinese market is reaching saturation with an expected CAGR of only 4.1% in the next six years, versus 19.7% for India and 16.3% for Indonesia. North America and Western Europe will be trailing behind with a CAGR of only 2% in the next six years.
Ronan de Renesse, lead analyst in Ovum’s Consumer Technology practice, commented: “Smartphones are leading the path to digital transformation and therefore have yet to unlock massive opportunities in many markets. The fact that almost all handsets to be sold in 2020 will be smartphones will lead to great socioeconomic achievements across the world in the next five years.”
Most of the growth in the smartphone market will come from the sale of low priced smartphones in developing as well as developed countries. This price tier will represent more than 40% of global smartphone sales by 2020, up from 13% in 2014. Ovum’s global study of handset prices revealed a steep decline in smartphone prices: between 4Q13 and 4Q14, the median price of prepaid and SIM-free smartphones (representing 56% of all operator offers worldwide) decreased 28%, from US$360 to US$258. This decline is largely attributed to a structural shift toward lower-end smartphone models rather than price decreases in particular segments. With 40+ manufacturers recorded via this study, the low-end smartphone segment is also the most diverse and competitive.
“The entire device value chain is bending backwards to manufacture and distribute cheap smartphones at an acceptable level of quality. The benefits of transitioning a feature phone user to a smartphone are significant for operators and for digital service providers like Facebook and Google, to the point of becoming a strategic imperative,” concludes de Renesse.
A research was done by the global technology consulting firm International Data Corporation (IDC). They found out that smartphone shipments in the Middle East and Africa are set to total 155 million units in 2015 after increasing 66% year on year during the first quarter to reach more than 36 million units.