According to NPD Displaysearch the smartphone market is peaking this year. In the sense that this year, 2012, will be the peak year for new users to purchase smartphones. After this, the market will still grow substantially, of course, but by far the majority of the market will be current users upgrading or swapping out their phones, rather than new users moving to smartphones.
Despite the excitement surrounding the new iPhone, the volume of new smartphone shipments is lower than expected. NPD DisplaySearch downgraded its 2012 forecast of new purchases from 220-230 million to 177 million. The volume of replacement phones, however, is expected to increase as new smartphones enter the market.
There's two points to make about this prediction. If it's true then Microsoft has only a very small window (sorry) to get Windows 8 into this market and we would expect to see Apple and Android remaining as the dominant systems. For it is one thing to persuade someone looking to move to a smartphone for the first time to choose your OS. It's entirely another to persuade someone upgrading to abandon their current ecosystem, apps and time invested in how the system works. So a majority replacement market works very differently in competitive terms from one pulling in large numbers of first time users.
The second is a very different one. I'm not sure that I actually believe the numbers on offer. I think they ignore what is really going to happen with smartphones: that sometime pretty soon it's going to be just part of being human to have one. On a par with having underpants, or a watch (something which a smartphone can act as, even if it can't manage the wrapping up the groin bit). Yes, there are indeed parts of the world where $200 or $500 for a phone is an unimaginable amount of money to spend. Something that just won't happen. But it is in these very parts of the world that the value of a phone of any kind is highest. That poor Third World farmer out in the boonies gets more value from a weekly text telling him local sorghum prices than we do from gigabytes of web surfing.
Which is why feature phones are becoming so common in even the poorest parts of the world. And they're not just being used to make calls or receive texts either. They're becoming the must have interface with the modern world. In much of East Africa you can now bank, even exchange foreign currencies and make international payments on a feature phone. At present these handsets might cost $10 or $20. One can already purchase smartphones for $100 and less in these markets (this is entirely without airtime provider subsidy, this is the straight manufacturer to retail price) and I really wouldn't be surprised to see basic Android handsets at $25 within four years or so.
Displaysearch is predicting something over 1 billion smartphone sales a year, the vast majority of them replacements not new users, by 2016. I'm not in the prediction business but it wouldn't surprise me at all if the market were three times that size by then. I really do think it possible that half of humanity or more will adopt this technology.
