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Slower growth will challenge smartphone vendors in 2014

Mikael Ricknäs | Dec. 6, 2013
Vendors will continue to lean on higher resolutions and faster processors.

Last month, Qualcomm announced the Snapdragon 805 processor with the Adreno 420 GPU. With up to 40 percent graphics and compute performance improvement over its predecessor, the GPU enables "advanced console quality gaming on Ultra HD or 4K displays, which is beyond what most consumers have in their living rooms," according to Qualcomm.

The Snapdragon 805 processor — which runs four cores at up to 2.5GHz — is available in small volumes now and is expected to be available in commercial devices in the first half of 2014.

Next year will also see at least one major vendor emphasize that a new smartphone model can be transformed into a PC-like device, CCS Insight expects. The device will come with a second interface when deployed as a computer, which is something Ubuntu has been working on. However, despite some media attention, the device will enjoy limited success, it said in recent report.

More focus on low-end devices
Even though higher resolutions and faster network connections and processors will be enough to get some people to buy a new high-end smartphone, that segment of the market has plateaued. The key driver behind smartphone growth in the years ahead will be an expected price decrease, according to IDC.

In 2013, the average sales price for a smartphone is expected to be US$337, down about 13 percent from $387 in 2012. This trend will continue and prices will gradually drop to $265 by 2017, the research company recently said.

For vendors, this means finding a balance between performance, price and making a profit, according to IDC. But for users, this will result in more bang for their buck, and the difference between high-end and much cheaper phones will shrink.

The Moto G has already set a benchmark for phones that cost under $200 with its quad-core processor and 4.5-inch HD screen, and puts pressure on vendors like Samsung and LG Electronics to come up with something better.

Motorola Mobility, which has been struggling, seems to have a hit with the Moto G. The smartphone has already had a major impact, despite being on sale for only a short time, according to Magnus Ahlqvist, Motorola corporate vice president for Europe, Middle East and Africa.

One thing that's missing from the Moto G's spec sheet is LTE, which is still too expensive for vendors to add to their low-end products. But that is likely to change as competition heats up in the chipset market. MediaTek is getting ready to launch its first SoCs (system-on-a-chips) with LTE, which is expected to help push the price for a smartphone with LTE below $200 without a contract during next year.

 

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