China is set to become the world's largest smartphone market in 2012

By March 16, 2012
woman and mobile

China is likely to overtake the United States in terms of mobile sales. This, only if the prices of devices and services considerably decrease. And this might, in return, increase competition among manufacturers.

According to the Worldwide Quarterly Mobile Phone Tracker study from IDC, China is about to become the world largest smartphone market in 2012 with a 18.2 percent market share, overtaking the U.S. with currently a 21.3 percent market share. Indeed, China will hold 20.7 percent of the smartphone market this year, overtaking the U.S. by 0.1 percent, and will reach 20.2 percent by 2016, compared to 15.3 percent in the United States the same year. This trend can be explained by the size of the Chinese market, which is supported by strong demand and a fair replacement rate. But this growth is subject to two conditions: "The overall cost of ownership remains an obstacle for potential smartphones buyers," senior researcher in IDC, Ramon Llamas explains. Indeed, in order to achieve a significant market share, sellers and manufacturers of smartphones will have to offer low-cost devices to stimulate widespread adoption supported by increased competition. Similarly, Chinese operators will also have to offer packages at low cost.

India and Brazil on the right track

India and Brazil should also witness similar growth and will respectively reach a 9.3 percent and 4.7 percent market share by 2016. Currently ranking 9th and 11th in terms of smartphones consumption in the world, they are expected to respectively rank third and fourth by then. A market analyst in IDC India Mobile, G. Rajeev actually explains the growth in India by the fact that "Indian consumers are increasingly accustomed to the use of data and mobile for entertainment purposes among others." As for Brazil, the growth of smartphone adoption is closely linked to the economic situation of the population, the strong economic growth being itself connected to the country low inflation which tends to reduce the poverty of the Brazilians. Still, in these two countries, just like in China, the spread of smartphones is subjected to the cost of their purchase and use, and also to the development of infrastructures that will allow the spread of a quality 3G network.

A competition between manufacturers

Manufacturers will also have to lower their prices to meet the increased competition. Incidentally, local suppliers such as Huawai, ZTE and Lenovo in China, will be another important driver of smartphone consumption. In fact, Indian manufacturers such as Micromax, Spice, Karbonn and Lava have already launched low-cost devices to stimulate demand. An this should compelled manufacturers in developed countries to reduce their prices. "International players like Samsung and Nokia should also participate in volume growth with less expensive smartphones," Senior Market Analysis for Asia / Pacific in IDC, Wong Tech Zhunk, claims. Finally, the study predicts the growth of the adoption of such devices in mature markets too, but with smaller volumes.

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