Canalys’ latest smartphone forecasts show a clear rise in the importance of developing markets, and markets such as Brazil, Russia, India, Indonesia and China (BRIIC) will drive much of the volume growth in the global market in 2013 and beyond.
In total, developing markets will contribute 70% to 80% of the growth this year. The BRIIC countries each feature in Canalys’ top 20 new growth markets for 2013, while no developed market makes the list, and combined will account for 38% of global shipments this year.
“The smartphone market continues to see robust growth amid the faltering economies in developed markets. However, the performance of developing ‘new growth’ countries such as China is dramatic. Combined, the BRIIC smartphone markets have exceeded the total market size of North America and Western Europe.
“Despite such a large base, the BRIIC markets will still see a CAGR of 19% in the next four years (2012 – 2016) – significantly greater than the United States, Canada, Japan or any country market in Western Europe. Developing markets such as the BRIIC countries and others promise large, as-yet untapped growth potential,” says Canalys research analyst, Jessica Kwee.
China alone will absorb 240-million units, 29% of the 837-million global total, extending its lead as the world’s largest smartphone market over the United States. The United States is expected to reach 125-million smartphones in 2013.
“But the Chinese smartphone market will be dominated by domestically based vendors in the coming quarters,” says Nicole Peng, research director – China, based in Shanghai.
“Domestic brands are rapidly moving their businesses toward smartphones and winning consumers with their competitively priced devices. This will continue to put significant pressure on international vendors in 2013. With smartphones starting to penetrate lower tier Chinese cities, international brands lack real competitive advantage in those areas.”
2013 will also see more Chinese vendors expand their smartphone businesses into overseas markets. Lenovo announced its plans for international expansion in September, following in the footsteps of Huawei, ZTE and TCL-Alcatel. And smartphones from smaller vendors, such as Gionee, Yulong and Meizu, have already been launched in Russia, India, Taiwan, Southeast Asian and Latin American countries.
“Only very few Chinese smartphone makers have comprehensive or long-term international expansion plans in place,” says Canalys research analyst, Jingwen Wang.
“Their goals are straightforward: to grow economies of scale or fulfil production capacity and to increase profit margin as pricing pressure is lower in overseas markets. Nonetheless, it is time to think beyond Huawei and ZTE in terms of Chinese vendors with the potential to be disruptive internationally.”
Low-cost smartphones have drastically accelerated the decline of feature phones in China and this trend is expected to be seen in more emerging markets in the next three years.
And it will not only be the rapidly growing Chinese vendors that International tier ones should watch out for, but also the increasingly capable and credible home-grown brands in Brazil, India, and Indonesia making good headway in their respective domestic markets.