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Global SmartPhone Shipment to Cross 1 Bn Units

April 11th, 2013

SmartPhone Sales to Hit 1 Billion in 2013With EDGE smartphone retail price hitting US$50 in early 2013, we expect low end smartphone to cannibalize feature phone in a meaningful way, leading to a much higher than expected smartphone shipment in 2013.

Gartner broke down handset price by 3 segments: Premium Communication Device (ASP around US$340), Basic Communication Device (ASP around US$100), Utility Communication Device (ASP around US$30).

According to Gartner, smartphone shipment in developed markets will reach 345M units in 2013. For worldwide smartphone to hit 1.1 Bn units in 2013, total emerging market smartphone need to hit around 755M units in 2013.

In the Longer term, smartphone market may become more specialized as under,
Whitebox & Chinese brand to win the sub US$200 segment – With their low fixed cost and low gross margin requirement, we expect whitebox / Chinese brands also launch a large number of sub-US$200 models with relatively high end specification.

Internet / Software companies to lead the US$200-400 segment As we stated earlier, most internet / software companies will use their zero hardware margin business model to launch very high end hardware specs with a retailed price of US$249-299.

Apple & Samsung to dominate the US$500 plus segment Apple has the scale, brand name, proprietary OS to differentiate them from everyone else, a superb ecosystem and a huge number of frenetic fans. Samsung has the scale and the most advanced hardware to differentiate its product so they are also likely to continue to be a winner in the high end segment.

Based on Gartner’s estimate, total emerging market Premium Communication device will be 283M units. Assuming all Premium Communication device to be smartphone, to achieve 755M units of smartphone shipment in emerging market, 472M units of the total 615M units of Basic Communication Device in emerging markets need to be converted to smartphone in 2013, implying a 77% conversion rate.

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