Informa Telecoms & Media expects smartphone sales to split into two main segments during the next few years: low-end devices priced below $150 (£93) and high-end devices priced above $250 (£155).
Last year, higher-spec devices accounted for 85% of the smartphone market but their market share is expected to fall to 33% in 2017. Meanwhile, lower-spec smartphones will increase their market share over the next five years and will account for 52% of all smartphones sold in 2017, driven by demand from developing markets and from late adopters in more developed markets.
Overall, the average price of a smartphone is predicted to fall from $188 in 2011 to $152 in 2017, although average gross margin is expected to remain at around 20% -25%.
Malik Saadi, principal analyst at Informa Telecoms & Media, said “As the market develops, the supply chain will increasingly be divided between two camps – the innovators who will continue to introduce new features and high-performance components to the market place and followers who will take this innovation to the mass market in later years”.
He warns that established vendors could face a choice between fighting in the high-end segment of the market or dealing with stiff competition in the low-end segment.