Mobile device leaders Google and Apple are about to face new challenges as the theater of mobile competition shifts from its current markets to the developing world. Flurry announced earlier today its forecast of where the second billion mobile devices will be shipped and why international markets will become an increasingly important part of the mobile economy. Flurry predicts that international shipments will double the world’s 1 billion currently active smartphones and tablets by 2014. This shift plays to Android’s strengths in openness and price, and will test Apple’s ability to adapt to a market share acquisition strategy.
A combination of evolving mobile capabilities and upgraded global infrastructure has precipitated explosive worldwide growth of smartphones and tablets. Surprisingly, the U.S., with a 47% annual increase in active mobile device growth between April 2012 and April 2013, ranked in the bottom 5% of countries ranked by growth rate. In developing countries, 200% and 300% growth rates are not unusual because the change from early adoption to mainstream occurs so quickly and is proportionally large.
Flurry underscores the enormous growth potential of emerging markets by focusing on four of the 168 countries in their report – the U.S., China, Malaysia, Canada and India - with a chart comparing the population of each with the number of active devices. With a strong growing economy, roughly the same amount of active mobile devices as the U.S., and a population more than four times larger, China represents an enormous immediate growth opportunity. India, with a population almost equal to China’s, is comparatively earlier in its adoption of tablets and smartphones. With a less robust economy, it has a potentially large impact, but later in time.
Correlating Flurry’s forecast, IDC’s Worldwide Quarterly Smart Connected Device Tracker weighed in with a slightly more conservative 2014 forecast of 1.7 billion smartphones and tablets. IDC predicts that one billion of those units will ship to the emerging markets with over two thirds concentrated on the BRIC countries, Brazil, Russia, India and China.
IDC’s report defines the phenomena not only as a shift in markets but a shift in platforms. Tablet shipments would exceed portable PC shipments in these markets, confirming the erosion of the Wintel architecture as tablets replace many of the PC use cases at lower average selling prices (ASP).
With Google Play generating two thirds of its revenues from international markets, Google has gotten in early on this geographic market shift. At Google I/O last month, Google senior vice president Sundar Pichai pointed developers to the potential of large, fast-growing emerging markets with less than 10% Android market penetration and a total population of more than 4.5 billion people. He was followed by product and service announcements specifically targeted to helping developers reach international markets. This included development tools that enable developers to internationalize apps more easily and a Google-operated translation marketplace to simplify and accelerate the introduction of localized apps for new markets.
Then there's Qualcomm, which just last week debuted a new highly integrated chip, the Snapdragon 400, specifically targeted to power high-volume, lower-cost smartphones for these emerging markets. The integration of many new and widely deployed communications protocols with quad-core processors of the Snapdragon 400 on a single System on a Chip (SOC) makes it easier to design and cheaper to manufacture smartphones.
Mobile is at a tipping point. Smartphones have dramatic room to grow to replace the remaining feature phones, which account for more than 80% of the 6.8 billion phones in use. Maturing capabilities, locally relevant apps and reduced manufacturing costs will precipitate smartphone shipments in emerging countries. PCs will be exchanged for lower-cost tablets. For many people in emerging markets, tablets and smartphones will be their first internet-connected devices.
Fortunes will be made and lost in the emerging mobile markets. Incumbent app developers will need to serve new markets to prosper. New app developers and manufacturers will grow in emerging countries to be the first to serve new customers in local markets. And Android’s openness gives it a clear advantage.