Android continues to lord over the smartphone biz

More than a billion Android handsets are expected to ship by year's end, easily outpacing the 178 million iPhones hitting store shelves, new data from IDC shows.

The iPhone might not account for the most shipments, but it will generate serious revenue. Sarah Tew

Android continues to dominate the smartphone business and will likely do so for the foreseeable future, new data from research firm IDC shows. But overall growth in the smartphone market is slowing.

Total Android shipments this year are expected to hit 1.06 billion when 2014 come to a close, giving Google's mobile operating system 82.3 percent control over the smartphone space this year, market researcher IDC reported Monday. Apple's iOS will finish in second place with 13.8 percent share and 178 million shipments, IDC said. Windows Phone will muster just a 2.7 percent share on 35 million smartphone shipments.

The forecast looks especially gloomy for alternative competitors on the mobile scene, IDC said in a statement. "With Android volumes so dominant, it is no longer a possibility for new operating systems like Tizen and Firefox to compete on price alone -- any underdog OS must bring a radically different appeal to gain any significant traction."

IDC predicts worldwide smartphone shipments will reach almost 1.3 billion units in 2014, which represents about a 26 percent increase over 2013. But that growth is expected to slow significantly in 2015, when IDC is predicting 1.4 billion smartphones will be shipped -- about a 12 percent year-over-year growth rate. And that estimated slowdown in growth continues through at least 2018.

The data from IDC is based on actual shipments calculated so far this year and on its forecast through the end of 2014. Last week, the research firm released shipment forecasts on the tablet market and found that for the first time, Apple's year-over-year iPad shipments would decline by about 13 percent. Android, meanwhile, will remain as the dominant force in tablets, shipping 160 million units worldwide and accounting for 67.7 percent of the space.

A similar scenario is expected to play out in the smartphone business, IDC's data shows. The company says that at the end of 2018, Android smartphone shipments worldwide will reach 1.5 billion units and its market share will hit 80 percent. Apple's iOS will see its market share decline a bit to 12.8 percent, but total shipments will jump to 240 million units.

Neither Apple nor Google immediately responded to a request for comment on Monday's IDC report.

Meanwhile, third-place Microsoft will see some growth over the next four years, IDC predicts. While Windows Phone shipments will hit just 35 million units this year and account for 2.7 percent of the space, that figure will jump to 5.6 percent in 2018 after Windows Phone users ship 105 million units worldwide, IDC expects.

Microsoft declined to comment on IDC's sales figures.

Of course, when it comes to market dominance, it's not all about the number of shipments. Total smartphone industry revenue will hit $382.9 billion on hardware alone in 2014 and that figure will jump to $451.8 billion in 2018. While Android is expected to own 80 percent of shipments in 2018, the operating system will account for for 61 percent of the industry's revenue that year. Apple's iOS will generate 34 percent of the worldwide smartphone revenue, despite shipping a projected 13 percent of smartphones that year.

"Apple's approach with premium pricing ensures a growing portion of overall revenues despite its declining market share," IDC's Ramon Llamas said in a statement. "Meanwhile, Android's multi-faceted approach -- with forked versions and low-cost Android One strategy -- will produce mixed results, yet it allows deeper penetration into emerging markets. That can lead to additional pressure on its vendor partners, who will need to seek greater differentiation in terms of devices and experiences in the hyper-competitive smartphone market."

Looking ahead, customers should also expect lower pricing on all smartphones. The average selling price of a smartphone this year is $297, but IDC says that will fall to $241 by 2018 as emerging markets become an increasingly important space for vendors.

"Consumers no longer have to go with a top-of-the-line handset to guarantee decent hardware quality or experience," said IDC's Melissa Chau."The biggest question now is how much lower can prices go?"

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