​GfK findings on the telecommunications market - first half of 2014

Nuremberg, 3 September 2014 - Global demand for mobile handsets once again reached a record high. Developing countries were the powerhouses of this increased demand. The growth was primarily attributable to smartphones, while feature phones continued to decline. Smartphones with advanced features have now been introduced at the lower price end and are not only competing with feature phones, but also putting pressure on the sales of higher priced smartphones. These are GfK's findings on the telecommunications market, which are published to coincide with the IFA 2014 trade fair in Berlin.

Between January and June 2014, global unit demand for smartphones rose by 26 percent compared with the same period of the previous year. At the same time, the market for conventional mobile phones shrank by 13 percent. However, both trends led to an overall increase of 8 percent in total sales volume. Smartphones took up 66 percent of the market share in mobile phone sales, leaving the remaining 34 percent to feature phones.

Developing countries were the powerhouses of the increase in smartphone demand. Market saturation point is still some way off and there is still considerable growth potential. In the first half of 2014, smartphones sales in the BRIIC countries, Brazil, Russia, India, Indonesia and China, grew by 32 percent on average. In Western Europe, where smartphones have long been firmly established, the market only recorded growth of 11 percent.

Price matters

Smartphones are quickly becoming a commodity product. Ever lower entry-level prices are attracting many first time users. As competition on the market intensifies, price is becoming an ever more important market differentiator. The average non-subsidized price dropped from €250 in 2013 to €211 at global level, while in Western Europe, it fell from €350 to €330 over the same period. When looking at global price categories, smartphones that cost less than €300 have increased their market share from 71 percent to 78 percent. In Western Europe, the same trend is also evident, with growth from 51 percent to 56 percent
Advances in performance

In the first half of 2014, no major innovations were introduced in the market. Instead, the existing performance features of devices were given significant facelifts. Displays are becoming larger, casings slimmer and the processing power significantly stronger while integrated cameras are equipped with more megapixels. In Western Europe, the average smartphone screen size increased from 4.0 inches to 4.2 inches, with the trend expected to continue in the second half of the year. Phablets, smartphones with a screen larger than 5.5 inches, have increased their global market share from almost zero last year to 5 percent in 2014. Interestingly, they lagged behind at 2 percent in Western Europe. To accommodate portability, the increasing size of the devices is offset by the decreasing thickness. In the first half of 2014, nearly 75 percent of the smartphones were 10 mm thick or less.

In terms of performance, smartphones made significant progress in the first six months of 2014. On average, the number of processing cores has increased in every price class, with one in four smartphones in Western Europe having four or more processing cores. With regard to cameras, 51 percent of the smartphones sold in the first half of 2014 feature six or more megapixels. Last year this was 41 percent. Internal memory capacity is also rising as devices with at least 8 GB of storage comprised 67 percent of the market, up from 61 percent. Near field communication-enabled smartphones achieved a share of over 41 percent, paving the way for them to replace any type of electronic payment or identification card. The long-term evolution-compliance share hit 40 percent.

Android operating system remains leader

The market of operating systems continues to be stable and hard for competitors to crack, with Android still dominating. In Western Europe, Android has a market share of approximately 73 percent. Its share is even stronger on a global level. Efforts for a more scattered market continue to emerge from various players, but progress is slow to this moment.

Trend towards greater variety

The variety of smartphones on offer continues to increase, adding more options in every price segment. In spite of fierce competition, new players are entering the smartphone market, taking advantage of alternative distribution methods and channels, such as direct sales, to gain a foothold in the market. They are above all offering devices in lower price categories. From cheaper entry-level smartphones to high-end phablets, customers have a broad spectrum of products to choose from on the market at present. There is also no shortage of further benefits, as these all-rounder devices have the potential to replace our physical wallets and IDs, as well as to play a cornerstone role in the integration of "the internet of things" (IoT) and mobile health applications. Not to forget to mention the role smartphones play as a core product for the development of wearable devices. The development of this market will be very interesting to follow. For 2014 as a whole, GfK predicts a 28 percent increase in sales volume to approximately 1,274 million smartphones to be sold worldwide.

The method

Through its telecommunications retail panel, GfK regularly collects data on mobile and landline phones, tablet computers, mobile broadband sticks, mobile phone accessories, radio devices, wearables and telephone tariffs in 90 countries worldwide. The present analysis is based on findings on the worldwide development of the mobile communications market for the first half of 2014. For the Western European market, this evaluation is based on findings information from France, Germany, Italy, the Netherlands, Spain and the UK. 

Further information: Arndt Polifke, +49 911 395-3116

GfK activities at the IFA, 5-10 September 2014, Berlin:

1) The GfK info point at the IFA press center will provide all information to be published by GfK during the IFA

2) Our experts can be found in the GfK office at the IFA (VIP room 2, Grosser Stern) for face-to-face consultancy. View GfK's precise location on the exhibition map at: http://www.gfk.com/Documents/IFA%20map.jpg

3) The GfK conference "Be Smart - Meet the Consumer Products of Tomorrow" takes place on 4 September, at 1 pm (4 pm finish) at the IFA, Marshall Haus Messegelände Berlin. The itinerary for this event can be downloaded at: http://www.gfk.com/de/news-und-events/events-und-webinars/Seiten/GfK-Konferenz-auf-der-IFA.aspx

4) GfK talk at the Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) event on 5 September, at 3 pm (6 pm finish), Hall 15/2F.
GfK speaker: Peter Goldman, Vice President 
Topic: "Home Appliances - Growth and Innovation"

5) GfK talk at the "China Symposium on Consumer Electronics and Household Appliances 2014" hosted by the China Household Electrical Appliances Association (CHEAA) on 5 September, at 1 pm (2.30 pm finish), Kant Room, 3F, Seehof Berlin Hotel
GfK speaker: Friedemann Stoeckle, Global Director MDA & Automotive Topic: "Global Market Trend for Home Appliance and Consumer Electronics and Development Opportunities in China"

About GfK

GfK is the trusted source of relevant market and consumer information that enables its clients to make smarter decisions. More than 13,000 market research experts combine their passion with GfK's long-standing data science experience. This allows GfK to deliver vital global insights matched with local market intelligence from more than 100 countries. By using innovative technologies and data sciences, GfK turns big data into smart data, enabling its clients to improve their competitive edge and enrich consumers' experiences and choices.

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