Smartphones in emerging markets - The times are a-changin'

This report is an offshoot from our global smartphone outlook report published in August, deep diving into the changing smartphone dynamics in emerging markets.

Smartphone penetration has now reached 35% worldwide, and we forecast this to rise to 65% by 2020. Translated into absolute terms, this is an increase of 3 billion users between 2013 and 2020. However, unlike the boom to now, emerging markets will drive this next wave of growth, presenting a vast and largely untapped audience with a low cost route onto the internet. Falling device prices have turned into something of a tide, with smartphone ASPs now 30% below their 2008 levels in Asia, 25% down in Latin America and 20% in Africa. This has, of course, driven consumer take-up, but it has also changed the nature of competition and lured new players into the market with disruptive business models.

We explore these in this report, particularly the gateway model being pursued by Xiaomi and a host of others. We also discuss the implications for smartphone ecosystems; while Android is likely to remain the number one platform in market share terms, the real change lies beneath this, with a host of companies from e-commerce to IP messaging now building their own (increasingly large) ecosystems as a means to secure consumer engagement in the mobile era. Finally, we explore the outlook for device prices, particularly within the sub $100 segment.