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8/30/2012
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Android Drives China Smartphone Adoption Past U.S.

China will race past the U.S. in smartphone adoption this year, thanks to inexpensive Android devices.

Apple iPhone 5 Vs. Samsung Galaxy S III: What We Know
Apple iPhone 5 Vs. Samsung Galaxy S III: What We Know
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The United States' standing as the number-one market for smartphones is about to end. By the end of the year, more smartphones will be sold in China than in the U.S., predicts IDC. The U.S. smartphone market is still growing, but China's is growing faster, and India's is growing the fastest of all.

In 2011, 21.3% of all smartphones sold around the globe were bought in the U.S. China was a close second, with 18.3% of the world's smartphone sales, followed by the U.K., in third place with a meager 5.3%.

Come December, the tables will have turned. Research firm IDC predicts that China will surpass the U.S., with 26.5% of all smartphone sales, and the U.S. will be responsible for 17.8% of smartphone sales. The U.K. will still rank third, with 4.5%.

Why is China's smartphone growth outpacing the U.S.? Low-end and inexpensive Android devices, explains IDC.

[ Will Apple's legal victory affect Samsung's bottom line? Read Are Consumers Dumping Samsung Smartphones? ]

"The PRC smartphone market will continue to be lifted by the sub-U.S. $200 Android segment," said IDC analyst Wong Teck-Zhung. "Near-term prices in the low-end segment will come down to U.S. $100 and below as competition for market share intensifies among smartphone vendors." Think ZTE, Huawei, and Coolpad. "Carrier-subsidized and customized handsets from domestic vendors will further support the migration to smartphones and boost shipments. Looking ahead to the later years in the forecast, the move to 4G networks will be another growth catalyst."

IDC notes that smartphone growth in China's largest cities is already slowing down, but growth rates in what it terms "second-tier" Chinese cities is picking up swiftly.

It's true that the U.S. has seen its own proliferation of low-cost Android devices, but carrier subsidies allow consumers here to purchase high-end devices for $200 with a contract. IDC also points out that just because China's smartphone adoption will pass the U.S. doesn't mean adoption of smartphones in the U.S. is slowing down. Not by a long shot.

"Now that smartphones represent the majority of mobile phone shipments, growth is expected to continue, but at a slower pace," said IDC analyst Ramon Llamas. "There is still a market for first-time users as well as thriving upgrade opportunities."

Carriers AT&T, Sprint, and Verizon Wireless all report that more than 50% of their customers are using smartphones. In recent quarters, the update of smartphone users in the U.S. has climbed dramatically, also thanks in part to low-cost Android devices.

Beyond these top three markets, the most growth in the coming years will come from India and Brazil. IDC reports that India's share of the worldwide smartphone market was 2.2% in 2011; it will be 2.5% this year and approximately 8.5% by 2016. That gives it a compound annual growth rate of 57.5% (compared to the U.S.'s 11.6% CAGR for the same period). Brazil's share will jump 44% between 2011 and 2016, from 1.8% to 4.4%.

Chart: 2011, 2012 and 2016 Smartphone Shipment Market Share, Top 5 CountriesDescription: Tags: Author: IDCcharts powered by iCharts

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