Last year, Google's hardware partners shipped approximately 470 million Android smartphones. Canalys says that number will hit 1 billion by 2017, giving Google a commanding 67% of the smartphone market worldwide, which is the same percentage it has now. Though the number of devices shipped will double, most of the growth is coming from first-time smartphone buyers converting from feature phones. Android may have a solid grip on the low end of the smartphone market right now, but that's going to change.
"The price of smartphones has fallen dramatically over the last few years and this has helped increase penetration," said Chris Jones, Canalys principal analyst. "As component prices continue to fall, vendors will be able to deliver great experiences on smartphones at low price points, which means that in many markets, feature phones will become extinct." By 2017, Canalys believes smartphones will represent 95% of all cellphone sales.
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One company that will benefit from the shift to low-cost devices is Nokia. Its Asha series of devices, which are billed as smart feature phones, will eventually go away in favor of low-cost devices using Microsoft's Windows Phone. By default, as Nokia benefits, so will Microsoft.
"The scalability of Microsoft's platform will be critical to its success and it has made progress here by enabling Huawei and Nokia to deliver Windows Phone products at aggressive price points," said Jessica Kwee, Canalys analyst. "Nokia is the most active vendor in the Microsoft camp and it continues to make steady progress with its Lumia portfolio. It has had some major carrier wins recently in the two largest markets of China and the U.S., which will help it build momentum in the short term."
This is part of the reason why Canalys expects the Windows Phone platform to surge from its 2.4% marketshare in 2012 to 12.7% in 2017. It will be right behind Apple's iOS platform, standing as the number three smartphone platform. A five-fold increase for Microsoft during a five-year period is a solid outlook, indeed.
Despite the smartphone market's overall growth, Apple's iOS platform will grow at a slower rate. The net effect will be that it loses marketshare. Canalys predicts that Apple's share will slip from 19.5% in 2012 to 14.1% in 2017. It will be just 1.4 percentage points ahead of Windows Phone.
"Apple's growth will be curtailed by the fact that momentum in the smartphone market is coming from the low end, and Apple is absent from this segment," said Kwee. "Android's continued dominance is due to the scalability of the platform." Toss in low-cost Windows Phones, and Apple may want to rethink its strategy of building only high-end devices.
But what of BlackBerry? BlackBerry managed to retain 4.8% of the smartphone market during 2012. Like Apple, shipments of BlackBerry devices will increase, but at a slower rate when compared to the market as a whole. Canalys thinks BlackBerry will still have about 4.6% of the market in 2017. In order to do that, however, BlackBerry needs to ditch its BlackBerry 7 handsets and get some entry-level BlackBerry 10 devices into its portfolio quickly.
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