Why Low-Cost Smartphones May Be A Threat To Apple

A low cost $25 smartphone was introduced at last month’s Mobile World Conference. Spreadtrum Communications and Firefox introduced the device at Mobile World Conference and for markets. According to MWC’s blog, while the device is not a threat to high end smartphone makers, it is a sign of the direction the smartphone world is heading - lower average selling prices ("ASPs"). MWC states that two forces will drive the trend - the end of subsidies and the introduction of fully featured lower cost smartphones with impressive performance.

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IDC predicts that a surge of smaller, lower-priced devices in the tablet market has led International Data Corporation (IDC) to increase its 2013 forecast for the worldwide tablet market to 190.9 million, up from its previous forecast of 172.4 million units. Increases in tablet shipments have been made throughout the forecast period with an average increase of 11% between 2013 and 2016.

Android-based tablets expanded their share of the market notably in 2012, and IDC expects that trend to continue in 2013. Android's share of the market is forecast to reach a peak of 48.8% in 2013 compared to 41.5% in IDC's previous forecast. Android's gains come at the expense of Apple's iOS, which is expected to slip from 51% of the market in 2012 to 46% in 2013. Longer term, both iOS and Android will eventually relinquish some market share to Windows-based tablets, with Windows 8 predicted to grow from 1% of the market in 2012 to 7.4% in 2017. IDC expects Windows RT growth to remain below 3% during the forecast period.

Samsung will stay the top Android-based smartphone seller. Sony and LG are also strong competitors in the Android smartphone market. iOS is the number two operating system. Apple is expected to grow faster due to its recent deal with China Mobile and introduction of more lower cost iPhone devices. Microsoft will also need to compete offering more low-cost smartphones to the emerging markets against the leading smartphone companies.