20 Comments

Summary:

Android will keep its majority smartphone share thanks largely to lower cost handsets says IDC. Wait a second: doesn’t that segment bode well for Microsoft too?

lumia 520

Research firm IDC shared its five-year smartphone forecast on Wednesday and you can probably guess the ending of that story. The firm says Android will dominate with a 77.6 percent market share by 2018, with Apple’s iOS share dropping slightly to 13.7 share and Windows Phone nearly doubling thanks to BlackBerry’s losses. That all makes sense, but one other thing in the IDC data doesn’t, and it has to do with the fastest growing market segment: Budget phones.

When it comes to the low-cost phones that will account for the most sales in the coming years due to high-end smartphone saturation, I get lost in IDC’s logic. The firm says:

Android has been, and will continue to be, the platform driving low-cost devices. ASPs of Android smartphones were well below market average in the first quarter of 2014 and are expected to be $254 for full year 2014, dropping to $215 in 2018.”

That part makes sense, as low-cost Android phones can sell well in regions where consumers can’t afford to spend $300 to $700 or more for a flagship smartphone from any company. Android isn’t the only budget game in town, though. IDC may be overlooking the solid experience an inexpensive Windows Phone can offer. And strangely, IDC even notes that the ASP, or average selling price, of Windows Phones is expected to be $214 by 2018, which is actually a dollar less than the company’s ASP prediction for Android phones.

My thought: If the average selling price of a Windows Phone rivals that of, or is less than, an Android phone, it’s a good situation for Microsoft, which can take advantage of this growth market.

Granted, Motorola has shown that you can have a pretty good Android experience for $129 with the Moto E. But kudos to Microsoft and Nokia, which proved the same thing with last year’s Lumia 520. I bought one on sale for $40 off-contract and it’s a superb value. In fact, it’s the bestselling Windows Phone to date by many accounts. Nokia recently followed it up with the $159 Lumia 630. I anticipate an even lower-priced 530 is in the works as well. While Android 4.4 was re-written to run better on lesser hardware, Microsoft’s much improved Windows Phone 8.1 software works just find on my cheap Lumia.

Nokia Lumia 630

It’s good news for Microsoft that IDC foresees a market share increase from 3.5 percent currently to 6.4 percent in 2018. But I think it’s even better news that Microsoft can produce low-cost handsets that are very capable and appealing for the budget market — so much so that IDC might be underestimating just how much share Windows Phone can pick up in this segment. And if the company can exceed sales expectations, it could even help with its higher-priced phones as hardware partners and developers decide to put more support behind the platform.

  1. I agree with your reasoning. IDC’s prediction of 6.4% of worldwide market for WP after 8 years and billions of dollars spent is pretty sad. I also think that number will be higher at Android’s expense due to the growth of the low-cost phone market.

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  2. It won’t matter unless they can sort out the mess they call an App store. The quality of those apps are terrible, and with not many big names writing an WP8 version it can only get worse.

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    1. Owned a Lumia 925 for a year or so, sold it and got a LG G2, actually went back to windows phone with a Lumia 1520 because there were apps I missed or the quality of the app was better on Windows phone.. Check out the quality of Tune in Radio, accuweather on WP, better than the Android counterpart. Nokia Here Drive is much easier to use than google maps… The youtube apps on Windows phone have more features than the youtube app on android from google…. The live tiles are great and the Camera and Mic on Nokias are superb.. So you people that are ruling out Windows phone may be missing out on a great product you would love if you gave a chance.

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      1. Being a tech savy person, I have used the former Windows Mobile, Symbian, Hp WebOS, Blackberry, Android, iOS and I have to say after giving Windows Phone a try I would never go back. WP8.1 is the most fluid, efficient and organized design I’ve ever experienced on a mobile device. The live tiles are a real joy to have.
        Too bad ignorance is a bliss.

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  3. Sorry, but low price does NOT mean that Windows Phone is competitive in that market. Android will still wipe the floor with Microsoft’s phone…more apps, better 3rd party support, BETTER HANDSETS at a given price point, oh, and they don’t have Microsoft’s name on the phone! The ONLY reason people bought Windows Phones was because of the NOKIA name, and the positive experience they have had in the past with THAT brand. You will see.

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    1. John, you might be right. But here’s a question: have you used the Moto E and the Lumia 520 to compare the experience? I have and it’s pretty comparable. In some areas, the Android phone is better. In others, the Windows Phone is.

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      1. Bryce Dayton Thursday, May 29, 2014

        And let’s not forget that the 520 is often found for $50, where the Moto E is $129. They’re practically in a different market at that point.

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    2. true about the apps, but what you don’t consider is that low end Android phones can’t run every app in the store. Face it, low end Android phones run like crap. Low end Windows phones run just fine.

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      1. J. Williams Friday, July 11, 2014

        I have to agree with you on this comment.

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  4. Vinay Deshpande Wednesday, May 28, 2014

    I agree, Microsoft (with the Nokia brand) is better positioned than what the IDC report suggests. Yes, they have an app store issue (at least as perceived by people who would like to get lost in half a million apps! or the raison-d’etre for Nokia X) and that should surely be a big point on Nadella’s radar.
    What would be interesting to see is where the tablet market would be in 2018. Because that can hurt the Microsoft cash-cow a lot more. (They never had a big market in mobile anyways).

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  5. Yeah sure Android has no ASP advantage but that’s not all that relevant.
    First it’s the ecosystem, Android has it,WP doesn’t and the developers resources are limited, M$ can keep trying to buy it’s way in but that can’t last.
    Second it’s the OS itself, Android is far more flexible for both users and OEMs.
    Third, the Windows brand is done for, they really need to dump it.
    But in the end what matters is how the big OS players handle the form factor transition to flexible and then stretchable screens and to glasses.

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    1. brianrmiller Friday, June 6, 2014

      >it’s the ecosystem, Android has it,WP doesn’t <

      This is an often-repeated cliché that means absolutely nothing. It's total nonsense gobbledygook, and it's easily proven by the fact that nobody who utters it can actually explain what it means. (Because it means nothing).

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  6. IDC has been very optimistic with WP market share predictions for several years now. Based on that track record I’d expect that the actual numbers will be well below 6.4%.

    The quality of the OS and the average prices may be competitive, but with the large number of different Android phones there will be one available at basically any price point. Apart from that, the significantly larger number of apps (including many free ones) and the familiarity of the market with Android are significant factors, too.

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    1. Agreed, the lack of apps (perceived or real) for Windows Phone is surely a factor here. With the last WP update, Microsoft has done much of the “catch up” work on the platform; now a significant part of its success may be in the hands of 3rd party developers.

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  7. My experience with Lumia 520 is very negative. The battery died within 6 months.

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  8. Mike Giaccone Saturday, June 28, 2014

    I have had WINDOWS phone since the LG INCITE and I like each version better and better and right now I am using the 1020 not because of the NOKIA name but because it is windows based. I would not give up windows phones for anything or any amount of money.

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  9. Bill Eidson Friday, July 11, 2014

    Yeah Windows phone is soooo good that MSFT had to buy its only major customer to keep the, from switching to Android….

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  10. Mike Giaccone Friday, July 11, 2014

    who ever wrote the IDC article is a biased person pay them no mind. I have a nokia 1020 and would not trade it for anything.

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