A smartphone is a class of mobile phones that are distinguished from feature phones by the stronger hardware and software capabilities and broad mobile operating systems. A wide range of features are available on smartphone such as multimedia functionality including music, video, gaming, and camera, voice and video calls, internet including web browsing, and wide software functionalities. There are different operating systems used in a smartphone namely iOS (Apple), Android (Google), Windows (Microsoft), Blackberry Operating System, and others. Growth of social media platform such as Facebook and Twitter has increased the usage of smartphone. Over the years, smartphones have massively evolved and are integrated with innovative technologies including global positioning system (GPS), gyroscope, flash memory, optical fingerprint sensors, near field connectivity (NFC), augmented reality, virtual reality, etc.
The global smartphone market is estimated to account for US$ 8, 15,356.1 Mn in terms of value and 1,794.7 Mn Units in terms of volume by the end of 2019
Market Dynamics- Drivers
Disposable income of consumers around the globe has increased, which in turn, has increased the possibility of consumers spending on media, entertainment, mobile communication devices, and networking. Purchase of electronic devices such as smartphones, laptops, tablets, and gaming consoles has witnessed significant increase in the recent past. According to an independent survey carried in early 2016 among electronic devices vendors, demand for smartphones has increased substantially owing to increasing disposable income of consumers, especially in emerging economies. Hence, increasing disposable income globally is expected to boost the global smartphone market growth during the forecast period.
Smartphone manufacturers are increasingly investing in research and development activities, in order to innovate technologically advanced devices to suit current consumer tastes. Moreover, manufacturers are investing in development and production of their own application processor (AP), in order to maintain their market share and boost profit margins. For instance, Apple Inc. develops its own AP and is one of the most sought after brands in the global smartphone market. Therefore, increasing investment in R&D activities is expected to support the global smartphone market over the forecast period.
LTE device, also known as a 4G device, is used for voice chats, surfing the Internet and sharing files at faster speeds. Improving LTE network infrastructure is expected to drive demand for smartphones globally over the forecast period.
Asia Pacific region dominated the global smartphone market in 2019, accounting for 39.7% share in terms of value, followed by Europe, and North America respectively
Source: Coherent Market Insights
Market Dynamics- Restraints
Premium smartphone makers such as Apple Inc. and Samsung offer high-end phones, which has been witness significant demand in the recent past, especially in developed countries such as the U.S., Canada, and European countries. However, in price sensitive markets such as China and India, consumers prefer smartphones that have the same features of high-end smartphones though at affordable price. Furthermore, mature markets such as North America and Europe are saturated, which is expected to hinder the global smartphone market growth during the forecast period.
4G LTE mobile cellular technology is used for high-speed mobile broadband connectivity that facilitates fast web browsing and smooth video streaming. According to Coherent Market Insights’ analysis, voice messaging, voice chat/video calling and SMS accounted for over 85% of overall revenue generated from smartphone services availed by users globally. Furthermore, service providers do not consider voice messaging, chat/video calling and SMS as part of their marketing strategy. Hence, such factors are expected to hamper the global smartphone market growth over the forecast period.
Introduction of 4G services in various emerging economies is expected to drive sales revenue of smartphones. Various smartphone makers can focus on launching 4G smartphones to cater to increasing demand for 4G-enabled smartphones. Moreover, increasing demand for 4G smartphones is expected to reduce the prices of 3G smartphones, which is expected to register high sales volume as a result. Such factors are expected to pose lucrative growth opportunity in the near future.
According to Coherent Market Insights’ analysis, high adoption of smartphones among consumers aged between 18 to 34 years is expected to drive growth of the global smartphone market over the forecast period. Smartphone manufacturers can target the aforementioned age group of consumers by offering high-end features including seamless voice control and flexible screen to attract younger population in the near future. Such strategies can present major market opportunities over the forecast period.
Source: Coherent Market Insights
Global smartphone market, by distribution channel segment, OEM’s sub-segment was accounted for 36.4% market share in 2019 and is expected to grow at a CAGR of 7.8% between 2019 and 2027.
Source: Coherent Market Insights
Aggressive approach over consumer retention and acquisition
Currently, there is an ongoing battle among smartphone makers over customer acquisition and retention in the North America market. Consumers are preferring iOS over Android in the U.S. market. According to the same source, Apple accounts for the strongest brand value among consumers in the U.S. That being said, around 68% of smartphone users in the U.S. prefer Samsung. In order to target consumers of high-end devices in the U.S. market, Samsung launched its flagship product called ‘Galaxy S’ smartphones.
Growing preference for premium smartphones
Although the Western Europe smartphone market has reached the maturing level, there is an increasing demand for premium smartphones in the region. According to Coherent Market Insights’ analysis, iOS was valued higher than Android, with the two operating systems accounting for 81% and 79% value share respectively in 2015. According to the same source, despite drop in demand for smartphones in the market in Western Europe by 29% quarter-on-quarter, and 6% year-on-year, demand for Samsung Galaxy S7 and S7 Edge remains high in the first three weeks of launch.
Value Chain Analysis
Key players operating in the global smartphone market are Samsung Electronics Co., Ltd., Vivo Communication Technology Co. Ltd, Apple Inc., Lenovo Group Limited, ZTE Corporation, Huawei Technologies Co., Ltd., TCL Communication Technology Holdings Limited, and LG Electronics Inc.
The smartphone is a cellular phone with an integrated computer chip, and other features such as an operating system, social media, and the ability to run high-end software applications. The majority of smartphone devices run on Android, iOS, BlackBerry OS, Windows OS, and others (Ubuntu, etc.), which increases the functioning capability of the smartphone. A wide range of features is available on a smartphone such as multimedia functionality including music, video, gaming, and camera, voice and video calls, internet including web browsing, and wide software functionalities.
Rising disposable income of people increases the spending on media, entertainment, networking, and mobile communication, which in turn increases the sales of consumer electronics devices such as smartphones, gaming consoles, and laptops.
In addition, growing end-use industries such as e-commerce is expected to propel the demand of smartphones over the forecast period. The continuous growing e-commerce industry has offered a convenient platform for consumers to buy a smartphone at a convenient price. For instance, according to India Brand Equity Foundation, the Indian e-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion as of 2017.
On the basis of operating system, the market is segmented into Android, iOS, Windows, Blackberry operating system, other (Sailfish, Tizen, and Ubuntu). On the basis of distribution channel, the market is segmented into, OEM, Retailer, and e-Commerce
Key features of the study:
“*” marked represents similar segmentation in other categories in the respective section.