worldwide mobile phone 2015–2019 forecast and analysis

April 2015, IDC #255079

MARKET ANALYSIS

Worldwide Mobile Phone 20152019 Forecast and Analysis

Ramon T. Llamas Anthony Scarsella

William Stofega

IDC OPINION

The worldwide mobile phone market will reach a total of 2.0 billion units, inclusive of smartphones,

shipped in 2015, resulting in a 2.6% increase from the 1.96 billion units shipped in 2014. Driving

volumes forward will be an increasing emphasis on smartphones, further penetration into emerging

markets, downward pricing pressure, and ongoing replacements on a worldwide basis. IDC believes

that, in 2019, total mobile phone shipments will reach 2.2 billion units worldwide at a CAGR of 2.8%

from 2014 to 2019. Key trends are as follows:

Chinese OEMs will search for new markets. Looking to replicate their success in China,

upstart brands such as Xiaomi, Lenovo, and Coolpad look to replicate their success outside of

their domestic markets. Of course, Chinese incumbent OEMs such as Huawei and ZTE have

also been able to grow their share and influence outside of China. Given the growth prospects

for the Asia/Pacific region, they don't necessarily need to enter hypercompetitive markets such

as Western Europe or North America as Asia/Pacific will account for 53.8% of mobile phone

shipments in 2015. Growth in EMEA will follow next, accounting for 27.2% of all mobile phone

shipments in 2015. Having moved past North America in 2013, Latin America will extend its

lead and see its market share decline to 9.6% in 2015 and remain there throughout the

forecast period. North America, characterized mostly by replacement handset opportunities,

will see the slowest growth of all the regions and make up just 9.4% of all mobile phone

shipments in 2015.

Smartphones will account for a larger share of all mobile phone shipments. Having accounted

for the majority of all smartphone shipments in 2014 (66.3%), smartphones will occupy a larger

share in 2015, reaching 72.3% of all mobile phone shipments. By 2019, this number will reach

as high as 87.2%. However, it is important to realize that this projection is highly dependent

upon a growing middle class and stable political environment in growth market countries.

Furthermore, despite declines in smartphone ASP, the smartphone is still not affordable for

economically/politically challenged regions, making the feature phone the only option.

4G mobile phones will surpass 3G mobile phones. IDC expects that, with a CAGR of 22.8%

and volumes reaching 1.5 billion units by 2019, 4G mobile phones will move past 3G mobile

phone volumes in 2015. Meanwhile, 3G volumes will decline by a CAGR of -10.1% dipping to

447 million units in 2019. Although 4G mobile phones will dominate the market by 2019, the

question of network density, particularly in rural areas, will be the true litmus test in terms of

success. At the same time, standards organizations have already started to plan for the

deployment of 5G networks by 2020, which will require new handsets.

2015 IDC #255079

TABLE OF CONTENTS

P.

In This Study 1

Methodology 1

Primary Data Sources 1

Secondary Sources 1

IDC's Worldwide Quarterly Mobile Phone Tracker 2

Situation Overview 2

4Q14 Overview 2

4Q14 Vendors 2

2014 Overview 5

Future Outlook 6

Forecast and Assumptions 6

Assumptions 6

Worldwide Mobile Phone Forecast 10

Mobile Phone Forecast by Region 11

Mobile Phone Forecast by Device Type 12

Market Context 15

Essential Guidance 17

Operating Systems and Hardware 17

Pricing 17

Value 18

Battery Life 18

Learn More 18

Related Research 18

2015 IDC #255079

LIST OF TABLES

P.

1 Top 3 Assumptions for the Worldwide Mobile Phone Market, 20152019 6

2 Key Forecast Assumptions for the Worldwide Mobile Phone Market, 20152019 8

3 Worldwide Mobile Phone Shipments by Region, 20142019 11

4 Worldwide Mobile Phone Shipments by Device Type, 20142019 13

5 Worldwide Mobile Phone Shipments by Region, 20092019: Comparison of

September 2014 and April 2015 Forecasts 15

2015 IDC #255079

LIST OF FIGURES

P.

1 Worldwide Mobile Phone Shipment Share by Top 10 Vendors, 4Q13 and 4Q14 3

2 Worldwide Feature Phone Shipment Share by Top 10 Vendors, 4Q13 and 4Q14 4

3 Worldwide Smartphone Shipment Share by Top 10 Vendors, 4Q13 and 4Q14 5

4 Worldwide Mobile Phone Shipments, 20142019 11

5 Worldwide Mobile Phone Shipments by Region, 20142019 12

6 Worldwide Mobile Phone Shipments by Device Type, 20142019 13

7 Worldwide Mobile Phone Shipment Share by Device Type, 20142019 14

8 Worldwide Mobile Phone Shipments, 20092019: Comparison of September 2014 and

April 2015 Forecasts 17

2015 IDC #255079 1

IN THIS STUDY

This IDC study presents the five-year forecast for mobile phone shipments worldwide by device

vendors. It is part of IDC's continuing research with respect to mobile phones, inclusive of

smartphones. Findings in this document are based on information gathered from primary and

secondary sources during the past three months.

Methodology

In preparing this document, which is the result of ongoing research in mobile devices, IDC conducted

extensive, structured interviews with most major device vendors. In some instances, specific issues

were reviewed with vendors in follow-up interviews. Multiple key mobile network operators were also

interviewed to assess their device needs as well as their network deployment schedules and services

marketing plans.

The information gathered through such means was supplemented with various secondary sources,

including press releases, marketing and technical literature, white papers, filings with the Securities

and Exchange Commission (SEC), quarterly conference calls, and reports published in trade and

business journals.

The information was then filtered through IDC's forecasting analysis process. This is an ongoing,

iterative process in which initial forecasts are made, analyzed, and revised through the cooperation of

IDC analysts worldwide. Worldwide and regional forecasts were evaluated and revised to reflect the

latest market information, including quarterly vendor performance and developing regional trends.

Note: All numbers in this document may not be exact due to rounding.

Primary Data Sources

IDC relies on the following primary sources for its data:

Suppliers and resellers. Analysts in IDC offices around the world are in contact quarterly and

meet regularly with mobile device system, subsystem, component, and software developers,

manufacturers, and resellers that provide ongoing information related to specific mobile device

models and brands, overall technology, and application, pricing, distribution, and market

trends.

Primary research. IDC engages in a broad spectrum of end-user surveys in consumer and

enterprise markets throughout the year, which contributes to an understanding of demand-side

issues, trends, and attitudes.

Secondary Sources

IDC also uses the following secondary sources:

Published financial data. Quarterly financial statements, 10Ks, annual reports, Dun &

Bradstreet databases, Moody's and Standard & Poor's directories, newsletters, online

database services, Web sites, and other published financial sources (including local

newspapers) were used to determine vendor shipments.

Company press releases. Corporate press releases, specification sheets, price lists, catalogs,

fax-back services, and financial disclosures provided sales-, product-, and production-related

information.

2015 IDC #255079 2

Published trade data. Publications from trade organizations, associations, and government

agencies provided data on a variety of related markets, including component shipments,

software, related product trends, and regional exports/imports.

Press reports. Articles from the mobile device industry trade and general business press

provided information on products, vendors, technology developments, and market trends.

IDC's Worldwide Quarterly Mobile Phone Tracker

IDC leverages its Worldwide Quarterly Mobile Phone Tracker, a service that tracks mobile phone and

smartphone shipments. With participation from nearly 30 analysts spread across the globe, IDC's

Mobile Phone Tracker provides accurate market-level data on mobile phones and smartphones on 70+

vendors.

SITUATION OVERVIEW

4Q14 Overview

In 4Q14, mobile phone shipments increased to 538.8 million units on a worldwide basis, up by 8.1%

from the 498.6 million units shipped in the same period in 2013. This is 3% higher than the units IDC

forecast in November 2014. The increase was primarily fueled by strong smartphone sales, which

increased share by 12% on a year-over-year basis and accounted for 70.5% share of the total mobile

phone market. In particular, strong demand for the new iPhone 6 pushed sales and the supply chain

beyond expectations. Mature markets like United States and Canada make up 90% of smartphones,

while CEMA is the least developed region with only 53% share.

Feature phone shipments hit 158.8 million units in 4Q14, declining at a faster rate than previous

quarters. Still, there were a few bright spots. Japan saw any increase in this segment because of the

demand for feature phones for the elderly and children. Microsoft (via Nokia) remains the largest

feature phone player, double the size of nearest competitor Samsung.

4Q14 Vendors

Rankings among the top mobile phone vendors saw some changes as consolidation in the market

boasted shipment volumes, while vendors such as Samsung finished out the difficult year on a less-

than-positive note. Overall, in 4Q14, Apple's introduction of the new iPhone 6 helped the company

move ahead of Microsoft to take the number 2 spot in shipments. Lenovo moved up from 8th to 4th

position on the basis of its acquisition of Motorola Mobility. By comparison, new entrant Xiaomi moved

up from 14th to 8th position on strong growth in China.

Rankings among the top feature phone vendors showed little change among the top 4 vendors, with

leadership by Microsoft (Nokia), followed by Samsung, TCL-Alcatel, and Micromax. Microsoft

continued its leadership in feature phones but declined somewhat from 26.7% in 4Q13 to 24.6% in

4Q14, with second-place Samsung matching the same rate of decline. Vendors such as Micromax and

Alcatel-TCL showed some small increases, but the overall market share rankings remained

unchanged.

Figure 1 shows market shipment share for the top 10 mobile phone vendors, inclusive of smartphones,

for 4Q13 and 4Q14.

Figure 2 shows market shipment share for the top 10 feature phone vendors for 4Q13 and 4Q14.

2015 IDC #255079 3

Figure 3 shows market shipment share for the top 10 smartphone vendors for 4Q13 and 4Q14.

FIGURE 1

Worldwide Mobile Phone Shipment Share by Top 10 Vendors, 4Q13 and 4Q14

Source: IDC, March 2015

2015 IDC #255079 4

FIGURE 2

Worldwide Feature Phone Shipment Share by Top 10 Vendors, 4Q13 and 4Q14


2015 IDC #255079 5

FIGURE 3

Worldwide Smartphone Shipment Share by Top 10 Vendors, 4Q13 and 4Q14


2014 Overview

In 2014, the worldwide mobile phone market reached a total shipment of 1.96 billion units, up 6.2%

from the 1.8 billion units shipped in 2013. This is 2.6% higher than the 1.91 billion units IDC forecast in

September 2014 but still matches the overall growth trajectory. IDC credits growth to a proliferation of

low-cost (sub-$125) devices within emerging markets as well as steady improvements in the overall

macroeconomy in key growth market countries such as India and China.

Feature phones, meanwhile, continued on their downward trajectory, with a total of 660 million units

shipped during 2014, down 20.3% from the 827.9 million units shipped in 2013. Conversely, in 2014,

smartphone shipments reached a total of 1.3 billion units, up 27.7% from the 1.0 billion units from a

year ago. Strong performances from Apple as well as surging growth from new entrants such as

Xiaomi and Huawei helped contribute to a strong year despite slowing growth in mature markets.

2015 IDC #255079 6

FUTURE OUTLOOK

Forecast and Assumptions

The worldwide mobile phone market, inclusive of smartphones, will reach a total of 2.0 billion units in

2015, up 2.6% from the 1.96 billion units shipped in 2014. Driving volumes higher is a continued

emphasis on first-time users in emerging markets, ongoing replacements within mature markets, and

continued interest in smartphones worldwide. In 2019, the final year of our forecast, total mobile phone

shipments inclusive of smartphones will reach a total of 2.2 billion units worldwide at a CAGR of 2.8%

from 2014 to 2019.

Assumptions

Table 1 lists our top 3 assumptions for the worldwide mobile phone market for 20152019.

Table 2 lists our key forecast assumptions for the worldwide mobile phone market for 20152019.

Table 1

Top 3 Assumptions for the Worldwide Mobile Phone Market, 20152019

Market Force IDC Assumption Significance

Changes to This

Assumption That

Could Affect Current

Forecast Comments

Economy Economic growth was

patchy in 2014, with a

strong rebound in the

United States after the

first-quarter downturn

while other regions were

mixed. Japan lost some

momentum after a sales

tax increase, while Europe

is still a mixed bag and

sanctions against Russia

have been disruptive for

the region (but mainly for

Russia). Growth continues

to cool in China, but so far,

the economy has been

steered clear of "hard

landing" scenarios. The

collapse in oil prices has

helped mitigate inflationary

pressures in emerging

markets, but deflation is

now a downside risk in

Europe. We assume that

the worldwide economy

will grow by 3% in 2015.

Like other IT

industries, the

success of the

smartphone

market is

predicated upon

the worldwide

economy.

Economic recovery

could take longer than

expected, or sudden

downturns could

jeopardize economic

stability.

Although the economic

growth was both up

and down in 2014, IDC

expects smartphone

shipments to increase

in 2015 as more

affordable models

enter the market at

numerous price points.

2015 IDC #255079 7

Table 1

Top 3 Assumptions for the Worldwide Mobile Phone Market, 20152019

Market Force IDC Assumption Significance

Changes to This

Assumption That

Could Affect Current

Forecast Comments

Replacement

handset

opportunity

Replacement rates will

continue to vary from

region to region based on

how the end consumers

purchase their mobile

phones (i.e., financing

versus unlocked). IDC

believes that, on average,

users will still keep their

phones for 24 months.

The way

consumers

purchase their

devices will

significantly impact

the upgrade cycle

for a majority of

consumers.

Carriers and retailers

rely highly on device

financing and leasing

options on traditional

contracts and

unsubsidized pricing to

promote low up-front

cost and increased

upgrading. Many of

these plans require a

device trade-in that will

ultimately put more

refurbished models

back into the market.

The budding growth of

the refurbished phone

market could have a

negative impact on

new handset sales as

well as on innovation

heading into 2019.

Features beyond

voice

Consumers will have a

continued interest in

features beyond voice,

including social

networking, health and

fitness, Internet voice

calls, and mobile

payments.

OEMs will continue

to drive the

complete

experience on

mobile phones by

offering new

software features

and services that

will attempt offer

consumers added

value compared

with the

competition. This

type of a complete

ecosystem through

hardware and

software will be

critical to vendors

as the mobile

phone continues to

replace more and

more devices

including your PC,

digital camera, and

wallet.

As devices become

more personal, they

also become bigger

targets. Security will

be a key issue on

many new software

innovations. Along

with security comes

rules and regulations.

Changes in security

and privacy laws could

play a big role in these

features going

forward.

The ability for OEMs to

build a solid

relationships with

industry leaders for

each added feature

will be key in driving

the success of these

features the end

consumer.


2015 IDC #255079 8

Table 2

Key Forecast Assumptions for the Worldwide Mobile Phone Market, 20152019

Market Force IDC Assumption Impact

Accelerator/

Inhibitor/

Neutral

Certainty of

Assumption

Macroeconomics

Economy Economic growth was patchy in

2014, with a strong rebound in

the United States after the first-

quarter downturn, while other

regions were mixed. Japan lost

some momentum after a sales

tax increase, while Europe is

still a mixed bag and sanctions

against Russia have been

disruptive for the region (but

mainly for Russia). Growth

continues to cool in China, but

so far, the economy has been

steered clear of "hard landing"

scenarios. The collapse in oil

prices has helped mitigate

inflationary pressures in

emerging markets, but deflation

is now a downside risk in

Europe. We assume that the

worldwide economy will grow

by 3% in 2015.

High. A down economy affects

business and consumer

confidence, the availability of

credit and private investment,

and internal funding. A global

recession would cause

businesses to delay IT

upgrades and some new

projects; a rising economy does

the opposite. A crisis (perhaps

triggered by more volatility in

emerging markets) could create

a chain of events that would

drive tech spending much lower

in the near term.

Exchange rates Currency devaluation in

emerging markets is still a

threat to short-term stability, but

the risks have receded slightly

since 2014 and have been

partly mitigated by the collapse

in oil prices. However, a drop in

oil prices usually correlates with

a strong dollar so that the

trends will reinforce each other.

The strong dollar is having a

negative impact on the foreign

earnings of U.S. firms.

Moderate. A stable or steadily

falling currency makes it easier

for vendors to manage supply

lines and stabilizes the prices of

imports and exports. A weaker

domestic currency can boost

international firms, which report

a positive impact on foreign

earnings. A weaker domestic

currency can also, however,

raise the cost of imports. If

prices for essential imports

(e.g., oil) go up, this can flip an

economy into a negative spiral.

2015 IDC #255079 9

Table 2



Accelerator/

Inhibitor/

Neutral

Certainty of

Assumption

Mobile phone

market

Telecom The telecom industry in its size

and utility is somewhat

insulated from sudden

economic swings, or at least it

has significant inertia. Service

provider revenue has picked up

in the past 24 months, driven

by the adoption of smartphones

and related mobile data

charges. Mobile data revenue

continued to drive growth in

2013, with overall telecom

services revenue increasing by

4%.

Moderate. The adoption of new

telecom services can drive IT

spending, such as those related

to mobile broadband and

devices. Faster network speeds

can also drive the adoption of

hardware, software, and

services.

Shift toward

smartphones

Handset vendors will slim their

product portfolios while

focusing heavily on

smartphones that can not only

capture market share but also

drive profits.

High. Smartphone shipments

will increase to meet demand.

Furthermore, smartphones will

become increasingly available

to the mass market. Feature

phones, meanwhile, will not

disappear altogether as these

are still the primary means of

cellular communication for

many users.

2015 IDC #255079 10

Table 2



Accelerator/

Inhibitor/

Neutral

Certainty of

Assumption

Replacement

handset

opportunity

Replacement rates will continue

to vary from region to region

based on how end consumers

purchase their mobile phones

(i.e., financing versus

unlocked). IDC believes that,

on average, users will still keep

their phones for 24 months.

High. As innovation slows and

smartphone saturation grows,

the worldwide mobile phone

market will rely heavily on the

consistent replacement of older

handsets (through upgrading)

to keep volumes increasing on

an annual basis.

Features beyond

voice

Consumers will have a

continued interest in features

beyond voice, including social

networking, health and fitness,

Internet voice calls, and mobile

payments.

High. New features and

functionalities, including social

networking, Internet voice calls,

and mobile payments, will

entice users to upgrade from

their current mobile phone.

There is no mistake that

innovation in the mobile phone

market is slowing; OEMs will

continue to resort to intuitive

software, services, and

industrial design to entice

consumers over to their brand.

Many of these incremental

changes could ultimately inhibit

future upgrades.

Mobile phone

pricing

The prices of smartphones will

continue to decline over time,

making them increasingly

affordable for the mass market.

High. Lower prices will help

continue to drive demand in

both emerging and developed

markets.

Legend: very low, low, moderate, high, very high


2015 IDC #255079 11

Worldwide Mobile Phone Forecast

Figure 4 shows our worldwide mobile phone forecast for 20142019.

FIGURE 4

Worldwide Mobile Phone Shipments, 20142019

Source: IDC, September 2014

2015 IDC #255079 12

Mobile Phone Forecast by Region

Table 3 and Figure 5 shows our worldwide mobile phone forecast by region for 20142019.

Table 3

Worldwide Mobile Phone Shipments by Region, 20142019 (M)

2014 2015 2016 2017 2018 2019

20142019

CAGR (%)

North America 195.8 188.5 192.7 180.1 185.4 176.2 -2.1

Latin America 194.5 192.3 200.3 207.6 212.5 215.2 2.0

EMEA 531.7 548.0 573.7 599.6 625.6 651.0 4.1

Asia/Pacific 1,038.5 1,082.6 1,125.0 1,161.0 1,190.3 1,204.0 3.0

Total 1,960.4 2,011.3 2,091.7 2,148.2 2,213.7 2,246.3 2.8

Note: See Table 1 for top 3 assumptions and Table 2 for key forecast assumptions.


2015 IDC #255079 13

FIGURE 5

Worldwide Mobile Phone Shipments by Region, 20142019


Mobile Phone Forecast by Device Type

Table 4 and Figure 6 show worldwide shipments by device type for 20142019.

Figure 7 shows worldwide shipment share by device type for 20142019.

2015 IDC #255079 14

Table 4

Worldwide Mobile Phone Shipments by Device Type, 20142019 (M)

2014 2015 2016 2017 2018 2019

20142019

CAGR (%)

Feature phones 660.0 556.5 478.3 407.7 340.2 287.2 -15.3

Share (%) 33.7 27.7 22.9 19.0 15.4 12.8

Smartphones 1,300.4 1,454.8 1,613.4 1,740.6 1,873.5 1,959.1 8.5

Share (%) 66.3 72.3 77.1 81.0 84.6 87.2

Total 1,960.4 2,011.3 2,091.7 2,148.2 2,213.7 2,246.3 2.8

Note: See Table 1 for top 3 assumptions and Table 2 for key forecast assumptions.


FIGURE 6

Worldwide Mobile Phone Shipments by Device Type, 20142019


2015 IDC #255079 15

FIGURE 7

Worldwide Mobile Phone Shipment Share by Device Type, 20142019


Feature Phones

The worldwide feature phone market will reach a total of 556.5 million units in 2015, down 15.7% from

the 660 million units shipped in 2014. The ongoing decline will largely be the result of vendors and

mobile operators transitioning their product portfolios away from feature phones and toward

smartphones. Still, IDC does not expect feature phones to disappear entirely. In 2019, the final year of

our forecast, total worldwide feature phone shipments will reach 287.2 million units at a 20142019

CAGR of -15.3%.

Smartphones

The worldwide smartphone market will reach a total of 1.5 billion units in 2015, up 11.9% from the 1.3

billion units shipped in 2014. Many of the same drivers IDC has addressed in the past will still be in

play: strong end-user demand from carriers and end users, more vendors transitioning their product

portfolios to highlight smartphones, a broad and deep selection of models for end users, and prices

that fit nearly every budget. More important will be the increased emphasis on low-cost smartphones

(sub-$150) going into emerging markets. In 2019, the final year of our forecast, total smartphone

shipments will reach 2.0 billion units worldwide, at a 20142019 CAGR of 8.5%.

2015 IDC #255079 16

Market Context

The data in this worldwide mobile phone forecast differs from our previous forecast (see Worldwide

Mobile Phone 20142018 Forecast Update: September 2014, IDC #250673 September 2014) in the

following ways:

Worldwide basis. On a worldwide basis, changes to our mobile phone forecast have not

exceeded our internal threshold of 5%.

Regional basis. On a regional basis, only EMEA and North America showed changes that

exceeded our internal threshold of 5%. For EMEA, this is expected to happen in the outer

years of 2018. However, this does not alter the overall upward trajectory of the EMEA mobile

phone market. North America 2014 volumes were affected by overwhelming demand for the

iPhone 6.

Table 5 compares our April 2015 and September 2014 worldwide mobile phone shipment forecasts by

region.

Figure 8 compares our April 2015 and September 2014 worldwide mobile phone forecasts.

Table 5

Worldwide Mobile Phone Shipments by Region, 20092019: Comparison of

September 2014 and April 2015 Forecasts (M)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

North America

April 2015 forecast 189.6 194.5 203.0 186.7 185.8 195.8 188.5 192.7 180.1 185.4 176.2

September 2014 forecast 189.6 194.5 203.0 186.7 187.1 185.6 184.2 183.4 183.1 182.2 NA

Change from September

2014 to April 2015

forecast (%)

-0.7 5.5 2.3 5.0 -1.7 1.8 NA

Latin America

April 2015 forecast 128.5 173.8 207.3 196.4 196.8 194.5 192.3 200.3 207.6 212.5 215.2



2014 to April 2015

forecast (%)

1.5 2.4 4.9 3.9 1.0 1.7 2.1 2.2 NA

2015 IDC #255079 17

Table 5

Worldwide Mobile Phone Shipments by Region, 20092019: Comparison of

September 2014 and April 2015 Forecasts (M)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

EMEA

April 2015 forecast 396.5 469.1 513.1 490.3 497.9 531.7 548.0 573.7 599.6 625.6 651.0



2014 to April 2015

forecast (%)

1.5 3.2 2.3 3.4 4.8 6.2 NA

Asia/Pacific

April 2015 forecast 626.7 757.4 794.9 869.2 966.2 1,038.5 1,082.6 1,125.0 1,161.0 1,190.3 1,204.0

September 2014 forecast 626.7 757.4 794.9 869.2 962.9 1,022.0 1,080.1 1,134.3 1,193.7 1,236.6 NA


2014 to April 2015

forecast (%)

0.3 1.6 0.2 -0.8 -2.7 -3.7 NA

Worldwide

April 2015 forecast 1,341.3 1,594.8 1,718.4 1,742.7 1,846.6 1,960.4 2,011.3 2,091.7 2,148.2 2,213.7 2,246.3

September 2014 forecast 1,341.3 1,594.8 1,715.3 1,738.1 1,827.9 1,910.0 1,990.2 2,069.3 2,152.3 2,215.8 NA


2014 to April 2015

forecast (%)

0.2 0.3 1.0 2.6 1.1 1.1 -0.2 -0.1 NA

Note: See Worldwide Mobile Phone 20142018 Forecast Update: September 2014 (IDC #250673, September 2014) for prior forecast.

Source: IDC, April 2015

2015 IDC #255079 18

FIGURE 8

Worldwide Mobile Phone Shipments, 20092019: Comparison of September 2014

and April 2015 Forecasts

Source: IDC, April 2015

ESSENTIAL GUIDANCE

Operating Systems and Hardware

Given the continuing dominance of Google's Android and, to a lesser extent, Apple's iOS, the

opportunity window for alternatives to challenge the established order is less plausible by the day.

According to IDC's 4Q14 Worldwide Quarterly Mobile Phone Tracker, Android and iOS together

accounted for 96.3% of all smartphone shipments. Microsoft has become the 3rd Platform, and its

efforts are dependent upon a successful Windows 10 launch coupled with new premium and value-tier

smartphones. In conversations with OEMs and developers, there is growing concerns about the power

of that these Android and iOS platforms wield forcing OEMs to look at other platforms, including

Android's open source platform. Others are looking at Sailfish, Firefox, and various Linux derivatives.

For OEMs, signing a licensing agreement for Android and Google's mobile application suite cedes

design and control of their products to Mountain View, California. Furthermore, many feel that Google's

effort to create a uniform experience for end users and a stable specification for developers has

created a class of smartphones that compete primarily on price. Thus, despite the fact that Android

has allowed new entrants and affordable devices, it has also created an environment in which it can be

difficult to differentiate.

2015 IDC #255079 19

Pricing

Much talk has been made of how low mobile phones can cost, and perhaps for good reason. Indeed,

cost is one of the primary drivers when selecting a new mobile phone. However, the market for low-

cost mobile phones, including smartphones, has already forced numerous global OEMs from the

market and moved them upstream into mid-range and high-end segments. Still, IDC believes that low-

cost mobile phones, particularly smartphones, will be one of the primary drivers of the market going

forward. IDC believes that, for those vendors competing in this market, cost is important but one piece

of an overall puzzle that must look at other factors, including experience, materials, local

manufacturing, and brand. Although growth in mobile phones has shifted toward entry-level devices

that favor efficient and low-cost Asian manufacturers, it is a mistake to assume that these same

manufacturers can deliver the same levels of innovation that creates an enhanced user experience. At

the end of the day, innovation and experience improvement require investment in R&D, which drives

cost but increases margin.

Value

Key to helping the OEM business grow will be a return to creating tangible value for customers as well

as creating partnerships with software developers to create differentiated product set. For instance, in

terms of display, the ability of the human eye to detect increased number of pixels was reached in

2011 when the iPhone 4 was released. At the same time, display can account for as much as 45% of

the cost of the device, thus OEMs are spending a large part of their BOM cost on something that looks

nice on a specification sheet but does not add any real value to the user experience!

Battery Life

Battery life continues to be the leading complaint among mobile phone users. Very few new

developments have occurred over the past several years. At the same time, new technological

developments are placing more demands on the battery (larger screens and 4G LTE connectivity

among others), and more demands are on the way. These should be a clear demand and opportunity

for improved battery life for mobile phones, one that will be rewarded if proven successful.

LEARN MORE

Related Research

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2015 IDC #255079 20

Synopsis

This IDC study presents the five-year forecast for mobile phone shipments worldwide by device

vendors. The worldwide mobile phone market will reach a total of 2.0 billion unit shipments in 2015, up

2.6% from the 1.96 billion units shipped in 2014. Driving volumes higher are smartphones, particularly

low-cost smartphones heading for emerging markets. From there, total mobile phone shipments will

reach 2.2 billion unit shipments in 2019 at a 20142019 CAGR of 2.8%.

"Although growth in the mobile phone market is slowing, there are some bright spots to look forward

to," says Will Stofega, research manager for IDC's Mobile Phones team. "We believe that some of the

sluggishness in the market is directly correlated to a slowdown in the introduction of innovative

products. We expect a return to more innovative products in the next two years, which will help spur

interest in new devices in mature markets."

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory

services, and events for the information technology, telecommunications and consumer technology

markets. IDC helps IT professionals, business executives, and the investment community make fact-

based decisions on technology purchases and business strategy. More than 1,100 IDC analysts

provide global, regional, and local expertise on technology and industry opportunities and trends in

over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients

achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology

media, research, and events company.

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255079.docx

worldwide mobile phone 2015–2019 forecast and analysis

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