Ubiquitous computing is taking over the world, one boatload of smartphones at a time.
More than a billion smartphones will be shipped this year according to International Data Corp’s (IDC) World Wide Quarterly Mobile Phone Tracker. Smartphone shipments will grow 39.3% from 2012 and are expected to continue growing for the rest of the decade. In 2017, IDC expects that 1.7 billion smartphones will be shipped.
This may come as somewhat of a surprise to everyday consumers in mature markets. In the United States, it seems like everybody has a smartphone and has had one for years. Yet between the relative affluence of the U.S., the mass of marketing dollars spent to get American consumers to buy gadgets and the carrier subsidy model that makes it easier to afford a new gadget, the U.S. is a misnomer in the world economy.
In the rest of the world, smartphone adoption is very clearly tied to price. The cheaper smartphones are, the more likely that consumers in emerging markets will be to purchase them. IDC notes that the average selling price of a smartphone has decreased this year to $337, down from $387 in 2012. The average selling price is expected to drop to about $265 by 2017, according to IDC. To note, these are prices without carrier-subsidized contracts but the actual retail cost of the device.
Most people in the U.S. do not think about the actual retail cost of a smartphone. To them, it is usually $199 or $99 when signing two years worth of service to a carrier like AT&T, Verizon, Sprint or T-Mobile. U.S. carriers have also instituted monthly payment plans for consumers that do not want to spend a couple hundred dollars at once where the cost of the phone is spread throughout the contract period.
In reality, smartphones cost significantly more than what U.S. consumers pay. The iPhone 5S sells for $650. The iPhone 5C sells for $550. U.S. consumers are not really aware of that fact because they only pay $199 or $99 for each model, respectively. If you try to buy an iPhone internationally, it is more likely that you will find the device at full retail price.
The dropping average sale price of smartphones is the biggest boon to Android adoption around the world. Google and its manufacturing partners know how to build quality smartphones that are at an acceptable price point for emerging markets. The biggest recent example of this is the new Nexus 5 that retails (off contract) at $350 made by LG and the $179 Moto G by Motorola. The price of the Nexus 5 is for a smartphone that is considered to use top of the line hardware specs with the latest Android mobile operating system. The Moto G is a budget smartphone with the latest Android software that compromises on some of the high-end features but still delivers a good experience and undercuts most major competitors on value for the dollars it is worth. Other manufacturers take note of the prices (like Nokia has with its budget Lumia 520) and will continue to drive the average selling price of a smartphone down for the rest of the decade. In turn, that means that more people end up buying smartphones.
Smartphone adoption rates will be highest in emerging markets like along the Asia/Pacific rim, the Middle East and Africa. In the U.S. and other mature markets, smartphone volume will continue to increase while adoption rates remain fairly flat over the next several years.
In 2012, smartphone adoption reached a billion users. At the time, we noted that the effects of that type of mass consumer adoption across the world are only beginning to be felt. This remains to be true. The greatest benefit of mass smartphone adoption is getting Internet-connected computers in the hands of billions of people across the world. This allows for instantaneous communication, access to information that would not have otherwise been accessible and education benefits. All at the touch of a fingertip, always on and always nearby. As smartphone proliferation spreads, the effects of ubiquitous computing across the world will only begin to magnify.