Power Shift: Sub-$150 Smartphones the New Norm by 2017

Paul Lilly

A dramatic shift in the smartphone market is taking place, Informa says.

Samsung's Galaxy S III and Apple's iPhone 5 are two of the most popular smartphone models in existence right now, and they both happen to be on the higher end of the pricing spectrum. Barring any special promotions or sales pricing, each device will typically set you back $200 with a two-year service agreement, which is the norm for a top-of-the-line device. By 2017, however, lower cost smartphones will dominate the mainstream market. So says a study from research firm Informa , which predicts that just over half -- 52 percent -- of all smartphones will be priced below $150 by 2017 .

"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," says Malik Saadi, principal analyst at Informa Telecoms & Media.

Informa predicts that the market share for expensive smartphones will shrink from 85 percent in 2011 to just 33 percent in 2017. In the same time frame, Informa says the average price of a smartphone will drop from $188 to $152, in part because of huge demand for entry-level smartphones in emerging markets.

The dramatic shift Informa sees taking place could take its toll on a number of established vendors.

"Nokia, RIM, LG, HTC, Motorola, and Sony will find it hard to adapt to the new smartphone landscape as this could take them away from their core business, servicing the core smartphone market," Informa points out. "These players will have to make a strategic decision to either fight in the high-end segment, a market strongly monopolized by Samsung and Apple, or alternatively face stiff competition by assemblers and Chinese ODMs in the low-end segment of the market."

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