Apple hasn’t announced any new smartphones yet this year, but the company’s plans seem like a matter of public record at this point. The “iPhone 5S” will reportedly be an incremental update that replaces Apple’s current flagship model in the late summer or early fall, and half a dozen solid reports suggest a new low-cost iPhone will debut in 2013 as well. Growth continues to slow at the high end of the smartphone market and a new opportunity is emerging at the bottom as feature phones become a thing of the past. It remains to be seen if Apple can build a phone that is affordable enough to compete in emerging markets, but market research firm ABI Research’s recent report might provide some incentive: Shipments of low-cost smartphones are expected to explode in the coming years.
In a recent report, ABI projected that shipments of sub-$250 smartphones will grow from 259 million units this year to 788 million units in 2018, at which point they will make up nearly half (46%) of the global smartphone market.
Mid-range handsets that cost between $250 and $400, and high-end phones that cost more than $400, will grow much more slowly over the next five years, ABI believes. Combined shipments are expected to grow from 635 million in 2013 to 925 million units in 2018.
“As the feature phone segment continues to lose its battle for relevance, the low-cost smartphone has become the tool for operators seeking to drive increased data revenues,” ABI analyst Michael Morgan said. Morgan and company see demand for prepaid wireless services and growth in emerging markets as key drivers for low-cost smartphones.
“As smartphone penetration moves from early adopters to mass-market and laggard consumer segments, the smartphone as a product will be less dependent on technical superiority, and more dependent on reliability and value,” ABI senior practice director Jeff Orr added.