IDC: Smartphone growth to continue, reach 1.2 billion in 2014
Summary: It seems everyone has a smartphone today, but there are still millions of potential customers and it is in these emerging markets where we will see continued steady growth. — Matthew Miller
Context & Ripple Effects
IDC's projection that smartphones reach 1.2 billion units in 2014 extends an arc visible since the market grew 20% year-over-year in Q1 2011, when smartphone shipments were still expanding fastest in developed markets. By this forecast, the growth engine has shifted: IDC attributes continued expansion to first-time buyers in emerging markets rather than upgrade cycles among existing users.
The forecast drew same-day pickups from eight outlets including TechCrunch, Gigaom, PC Magazine and Marketing Land, indicating analysts treat IDC's unit numbers as the industry's shared baseline for planning hardware, components and ad spend.
First-order effects
- Handset vendors chasing volume in emerging markets face a market where nearly all incremental 2014 demand comes from first-time buyers, rewarding low-price Android portfolios over premium-lineup breadth.
- Component suppliers — chipsets, displays, memory — get a planning signal to add capacity against a 1.2-billion-unit year, with allocation decisions concentrated among whichever vendors win the emerging-market share fight.
Second-order effects
- Carriers and operators in high-growth regions are pushed to expand data networks and prepaid offerings to serve buyers whose first internet device is a phone, shifting operator investment toward markets that were previously afterthoughts.
- As developed-market sales become replacement-driven, price competition intensifies at the entry level, pressuring margins for vendors that cannot compete below flagship tiers.
Third-order effects
- If the pattern holds — unit growth sustained by new adopters while mature markets plateau — vendor competition structurally shifts from expanding the customer base to fighting over upgrades, making share gains zero-sum and favoring vertically integrated or ultra-efficient cost structures.
- A device base measured in billions makes the smartphone the default computing platform for populations that never owned PCs, pulling software, services and eventually regulation into markets built around mobile-first access.
The trend: Smartphone growth is migrating from developed-market upgrades to emerging-market first purchases, with IDC's unit forecasts setting the planning baseline even as revenue growth decouples from shipment volume.