Smart phones to total nearly 70% of the market by 2017 benefiting AAPL and BBRY
While smart phones and feature phones shipped are projected at parity in 2013, smart phones are slated to comprise 67% of the mobile industry by ’17
Almost every mobile phone user wants more functionality and speed from the device they are using and in the near future “smart” phones will make up the majority of phones consumed in the world (see our article that outlines the difference between smart and feature phones). A mobile phone industry where manufacturers actually shipped a substantially higher amount of feature phones just two years ago will be a very different landscape in the near future.
In 2011, mobile manufacturers shipped well over twice as many feature phones than smart phones with industry shipping percentages tallying 71% for feature and 29% for smart phones. Smart phones, however, started to narrow the gap in 2012 gaining 13 points of global market share to 42%. For the first time in 2013, however, smart and feature phones are projected to be equally shipped across the globe with incremental demand for smart phones coming from emerging markets and more people generally requiring the sophistication of a better handset. Within the next 5 years, smart phone percentages shipped will continue to grow, surpassing feature phone demand in 2014 and growing to a 67% market share of total phone sales by 2017 according to the International Data Corporation (IDC).
As these adoption curves in the mobile industry unfold there will be winners and losers. As we have outlined before, Nokia (NOK) has the most exposure to declines in the feature phone market with smart phone only companies including Apple (AAPL) and Blackberry (BBRY) thus benefiting as demand picks up. While it is not inconceivable that AAPL and BBRY could launch lower end smart phone products to capture more market share in less affluent parts of the world, the demand curves are definitely coming their way as mobile users demand more advanced smart phone technology.
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