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IDC Sees Overall Slow Phone Growth, But Smartphone Boom Continues

IDC Sees Overall Slow Phone Growth, But Smartphone Boom Continues
December 4, 2012 11:40AM

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"Sluggish economic conditions worldwide have cast a pall over the mobile phone market this year," said IDC's Kevin Restivo. The market research firm predicts 1.7 billion phones will be shipped worldwide this year, up just 1.4 percent over last year. But IDC says 717.5 million of those phones will be smartphones, and that segment is up 45.1 percent over last year.

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The mobile phone world is growing like gangbusters...or is it? According to an IDC forecast, mobile phone market growth is slowing. The worldwide market is set to grow 1.4 percent year-over-year in 2012. That marks the lowest annual growth rate in three years.

IDC reports vendors will ship more than 1.7 billion mobile phones in 2012. In 2016, IDC forecasts 2.2 billion mobile phones will be shipped to retail. For the fourth quarter, global smartphone shipments will reach 224.5 million units, a 39.5 percent year-over-year growth. And for 2012, smartphone shipments are forecast to grow 45.1 percent year-over-year to 717.5 million units. But that doesn't make up for the slowing mobile phone market overall.

"Sluggish economic conditions worldwide have cast a pall over the mobile phone market this year," said Kevin Restivo, senior research analyst with IDC's Worldwide Quarterly Mobile Phone Tracker. "However, the fourth quarter will be relatively bright due in part to sales of high-profile smartphones, such as the iPhone 5 and Samsung's Galaxy S III, in addition to lower-cost Android-powered smartphones shipped to China and other high-growth emerging markets."

Slowing or Not?

Telecom industry analyst Jeff Kagan said he hears from the carriers that phones are still selling as rapidly as ever, but he said the growth is likely to slow eventually.

"Once we reach the magic number -- whatever that magic number is -- the growth of the smartphone market is going to slow. But everyone doesn't have one today. Roughly half of the market has a smartphone. The other half of the market isn't going to totally go smartphone. There are plenty of users who don't want smartphones," Kagan told us.

"Growth may be slowing because the first waves where users purchased super smartphones for the first time has passed and now they are buying every year or two years. But every smartphone user is going to be buying a new smartphone in a year or two. So it's not like smartphones are going to stop selling."

Android vs. iPhone

Android will be the clear leader in the smartphone mobile operating system race, thanks in large part to a broad selection of devices from a wide range of partners, IDC predicted. Samsung is the leading Android smartphone seller but LG Electronics and Sony are also selling their fair share of Android devices. IDC believes the net result of this will be continued double-digit growth throughout the forecast period.

"Underpinning the worldwide smartphone market is a constantly shifting mobile operating system landscape," added Ramon Llamas, research manager with IDC's Mobile Phone team. "Android is expected to stay in front, but we also expect it to be the biggest target for competing operating systems to grab market share." (continued...)

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