Mobile Communications

GSMA Research: Smartphone & the Developing World

On the ninth of September, Apple unveiled its latest iPhone range in California to the usual fanfare. There were two new models on show, the ‘iPhone 6’ and the larger-screen ‘iPhone 6 Plus.’ Some seven years earlier, the late Steve Jobs had unveiled the first generation iPhone, which would go on to redefine the way we think about smartphones. This event was followed shortly after by the rise of the Android smartphone operating system. Together, the iPhone and the Android OS would trigger a period of rapid growth in the smartphone market, creating one of the fastest-growing consumer electronic segments of all time.

GSMA Intelligence has just published a major report tracking the growth of the smartphone market since 2007 (the launch of the first iPhone) and how it expects the market to develop over the next six years through to 2020. This study tracks the number of smartphone connections registered on a mobile operator’s network (using operators’ reported data), which is not the same as smartphone shipments or sales data. Looking at things this way allows us to monitor the level of smartphone adoption compared to other device categories on the network, traditionally basic or feature phones, but increasingly data terminals such as tablets, dongles and routers (we exclude M2M connections for the purposes of this study).

So what do the numbers say? The study found that today smartphones have grown to account for a third of global mobile connections. That’s up from just under 5% in 2007 – and it is still growing fast. By 2020, GSMA Intelligence expects smartphones to account for two out of every three mobile connections globally – or six billion of the nine billion mobile connections forecast by that time.

One key trend over the last few years has been accelerating adoption of smartphones in emerging markets, primarily a consequence of rapidly declining price points. The $50 smartphone is becoming a reality and it is this low-end segment that is expected to drive volume growth. The developing world today accounts for two in every three smartphones on the planet, according to the new study. It is predicted that by 2020, four out of every five smartphone connections worldwide will come from the developing world.

Perhaps unsurprisingly, China is the world’s largest smartphone market, having overtaken the US in 2012. There were almost 630 million smartphone connections in China in Q2 this year, a figure that should hit one billion by 2016. The US, Brazil, India and Indonesia make up the top five.

It is important to look at smartphone connections in the context of the market’s total mobile connections base. This gives an indication of the maturity of the local smartphone market, as well as the headroom for future growth.

By this measure, we can see that in large markets such as China, smartphone penetration has only recently passed 50%. However, in many developed markets, smartphone penetration is approaching the 70% to 80% ‘ceiling’ at which growth tends to slow. According to the report, smartphone adoption is forecast to reach 75% in Europe and North America by 2020. Some markets are there already: Qatar and UAE already have smartphone adoption rates above 80%.

At the other end of scale, Sub-Saharan Africa currently has the lowest smartphone adoption rate worldwide, at 15%, but is expected to be the fastest-growing smartphone region over the next six years as affordable devices become more widely available and mobile broadband networks are deployed across Africa.

This shift in focus to the developing world has major implications as the smartphone becomes key to connecting the billions of global citizens not yet connected to the internet. Many of the business models that kickstarted the smartphone market in the developed world, such as handset subsidies, are not viable in emerging markets. Instead, operators are looking at innovative ways to get these smartphone users onto the mobile internet, possibly in partnership with those offering local, relevant content.

The launch of a new iPhone is always a big deal. But it will be the emerging market smartphones that will have the greatest impact on our industry – and the world – over the next few years.


Michael O’Hara is Chief Marketing Officer at GSMA



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