Deloitte’s Technology, Media and Telecommunications division has announced its predictions for the year, and the explosive growth of cheap smartphones ($100 or £65) are expected to tip 500 million owners by the end of 2012.
The smartphone market is currently dominated by Apple’s iPhone and Samsung devices running Google’s Android smartphone software, both of which cost around £500.
Deloitte says that the cheap smart phone market will explode in 2012. It estimates that 100 million of these devices have already been sold, and is tipping a further 300 million to ship in 2012. By year end, $100 smartphones will represent 20% of all phones shipped, and 33% of all smartphones shipped.
These sub-$100 devices will share some fucnationality with Samsung and Apple’s high end offerings, such as touch screens or full keyboards, but will bear lower specifications. They will have weaker processors (around 200-600Mhz compared to 1.5GHz), less memory (both storage and RAM) and lower resolution cameras (2MP as opposed to 10-20MP).
The targeted consumers will happily accept the cost/performance trade off, particularly in emerging markets where most will be upgrading from very basic feature phones. The growth of this market has been compared to the growth of the netbook, which offered low cost, low power alternatives for the third world, but ended up gaining popularity in the first world too. These devices will also be popular amongst teenagers in the first world looking for their first smartphone.
Few of these devices are expected to have 3G capabilities, focusing instead on the cheaper, more ubiquitous 2G technologies such as GPRS and EDGE. The key upgrade across for smartphone devices in 2011-2012 will be the integration of Wi-Fi capabilities, as the component prices here have fallen dramatically. This means these devices will also support email and instant messaging services, as well as pre-loaded apps in a closed OS, rather than utilising the high data requirements of serious app store.
The performance of these devices in developing markets is driven by the lack of physical IT telecommuncations infrastructure, such as telephone lines and fibre optics. As the report states, ‘the $100 smartphone may offer the easiest, most affordable way to satisfy communication and information needs in the developing world."
App developers in particular may want to adapt their software to suit this new market, who may not have access to app stores, extensive data services or even access to a credit card. These apps will also need to work on lower powered devices, if any software developer is looking at targeting the third world.
The boom in this industry will cause a flow on effect that may also see component producers come under added downward cost pressure across the whole supply chain. Touch screens, for example, have fallen in price by a third. Those producers that won’t or can’t make the price cuts will provide an opening for emerging markets suppliers, who may also look to break into the mainstream smartphone market.
