Smartphone share of overall mobile phone sales stalling at 70 percent

Prices are too high for smartphones to compete at the very bottom end of the market

Smartphones during the third quarter again accounted for about 70 percent of total mobile phone shipments. Prices need to fall even further to attract more users in emerging markets, but that won't happen overnight.

Though the smartphone share of overall mobile phone sales increased year over year, it has been flat, sequentially, at around 70 percent for the last couple of quarters, according to Neil Mawston, executive director at Strategy Analytics. For the smartphone share to increase, prices have to come down so more users in parts of the world such as Africa and India can afford them.

Today the cheapest smartphones cost about US$35 at wholesale, but prices under $20 are needed. Getting there will take a couple of years, at least. "In the short term, the component cost, IPR costs and the software costs are too high for smartphones to compete at the very bottom end of the market, so feature phones aren't going away," Mawston said.

Android and the Firefox OS are shaping up to be the two big platforms in the low-price segment of the smartphone market, while Samsung Electronics will duke it out with multiple Chinese and Indian vendors on the hardware side, according to Mawston.

Global mobile phone shipments increased to 459.5 million during the third quarter, including 320.4 million smartphones. Overall sales increased by 7.6 percent year-on-year, while smartphone sales increased by 26.7 percent.

The big winner during the third quarter was Chinese company Xiaomi, which became the world's third largest smartphone vendor.

Though Samsung was still the top seller, it was the biggest loser, as its market share tumbled from 35 percent to about 25 percent. The company was the only one among the top five to sell fewer smartphones than a year ago. The rest of the top five was made up of Apple in second place; LG Electronics in fourth; and Huawei Technologies in fifth place.

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