Feeds

Apple to maintain phone profit lead through years of 'enormous transition' – report

Windows Phone the rising star? Didn't see that one coming

Internet Security Threat Report 2014

Some observers have said that the high-profit party is over for Apple's iPhone now that the global smartphone market is becoming saturated, but the market researchers at IDC would beg to disagree.

IDC projections of smartphone average selling prices through 2018 – graph

There are low-cost Android phones and expensive ones – but on average they're cheap (source: IDC)

Yes, the smartphone market is beginning to plateau, with a year-on-year growth rate of 19.3 per cent predicted for 2014, dropping to 8.3 in 2017 and 6.2 in 2018, IDC analysts write in a report published this week. But that shrinkage won't force Apple to drop its average selling prices (ASPs), they conclude.

"Apple has maintained a tight focus on the high end of the market with its most current devices, a trend we expect to see continue into the future," they write. "This could keep iOS from realizing greater volumes within emerging markets, but sales in mature markets will offset much of the difference."

IDC predicts Apple's iPhone ASP to be $649 this year, and slip to $610 by 2018 – a drop of 1.2 per cent. They project that ASPs of Android-based smartphones, however, will sink from $247 to $202, a drop of 6.1 per cent.

IDC projections of smartphone average selling prices through 2018 – detail

Of the big four, everyone's prices will drop – but Apple's the least of all (source: IDC)

Android phones have the largest global smartphone marketshare by a wide margin; IDC projects that 950.5 million Android phones will be sold this year, rising to around 1.3 billion by 2018. That 2014-to-2018 compound annual growth rate (CAGR) of 10.7 per cent, however, is only marginally greater than Apple's CAGR for the same period of 10.2 per cent.

The big winner, IDC predicts, will be Windows Phone, with a 2014-to-2018 CAGR of 29.5 per cent. The big loser? Guess. Yes, you're right: "IDC has taken a conservative stance on BlackBerry's future," they write, having projected that the beleaguered Canucks to have a negative CAGR of -22.6 per cent through 2018, ending up with a market share of a measly 0.3 per cent.

IDC predictions of smartphone unit sales by operating system through 2018

Lookout, folks, here come low-cost Windows Phone handsets (source: IDC – click to enlarge)

IDC projects that low ASPs are the future – for most smartphone operating systems, at least. "Last year we saw a total of 322.5 million smartphone units ship for under $150 and that number will continue to grow going forward," writes IDC analyst Ramon Llamas. "We've already seen numerous smartphone announcements targeting this priceband this year, with some as low as $25."

The worldwide average ASP was $335 in 2013, they report, and is expected to drop to $260 by 2018. Android will race to the bottom with its advantage of "both a commanding market share as well as prices below the industry average," the report contends, and Windows Phone will benefit from new partners in emerging markets.

IDC sees Apple, on the other hand, continuing to garner ASPs of over three times those of both Android and Windows phone devices in 2018 while losing just 0.5 per cent in market share to Android's drop of 2.9 per cent.

Two different business models: small margins on squillions of sales, and large margins on a far smaller number. But as a recent report by Canaccord Genuity shows, Apple's model is doing just fine for them, providing a larger share of smartphone profits than any other vendor.

Whether that model will continue to reap the same rewards in a smartphone market that IDC says is going through an "enormous transition" remains to be seen. If their projections are correct, however, Apple's smartphone line will enjoy steady – and steadily profitable – days ahead.

That said, Wall Street demands market-beating growth, not boring ol' stability. If IDC's predictions are correct, Cook & Co. will have to live up to their CEO's predictions of "some really great stuff" in "new categories" this year to keep the moneymen from bailing on them and spreading their money around among, for example, rising Windows Phone vendors. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
Bono apologises for iTunes album dump
Megalomania, generosity and FEAR of irrelevance drove group to Apple deal
HBO shocks US pay TV world: We're down with OTT. Netflix says, 'Gee'
This affects every broadcaster, every cable guy
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
SCREW YOU, EU: BBC rolls out Right To Remember as Google deletes links
Not even Google can withstand the power of Auntie
Arab States make play for greater government control of the internet
Nerds told to get lost in last-minute power grab bid at UN meeting
Zippy one-liners, broken promises: Doctor Who on the Orient Express
Series finally hits stride, but Clara's U-turn is baffling
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
America's super-secret X-37B plane returns to Earth after nearly TWO YEARS aloft
674 days in space for US Air Force's mystery orbital vehicle
10 Top Tips For PRs Considering Whether To Phone The Register
You'll Read These And LOL Even Though They're Serious
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.