A billion smartphones were shipped in 2013—and that’s not even the interesting part

One way to boost growth: Convince people they need two phones.
One way to boost growth: Convince people they need two phones.
Image: Reuters/Mike Segar
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In 2013, the world’s phone manufacturers shipped (as opposed to sold) just over a billion smartphones according to IDC. Strategy Analytics, a competing research firm, puts the number for smartphones slightly lower at 990 million. Either way, what’s interesting isn’t the nice round ten-digit number—it’s the suggestion that the big manufacturers at the top are running out of road.

Start with Apple. It accounted for 15.3% of all smartphone shipments in 2013, even though it makes only a handful of very expensive models. That’s down 3.4 percentage points from the previous year. Samsung looks to be in slightly better shape, growing market share a smidge from 30.3% to 31.3%. But both companies announced disappointing numbers over the past week, with Samsung’s fourth-quarter handset sales down 9% (paywall) on the previous quarter and Apple selling 10% fewer iPhones than expected.

Then look a bit further down the rankings The next three biggest companies by shipments—Huawei, LG, and Lenovo—together grew their market share to 14.2%, up from just 10.9% last year.

The numbers point to an inescapable conclusion: The era of high-margin, high-growth smartphone sales is over. Huawei, LG and Lenovo make good phones, but few of their handsets aspire to be the very top of the market where the iPhone competes with Samsung’s Galaxy S series. Indeed, Samsung’s growth can probably be attributed to the lower-priced models it peddles in emerging markets, rather than its flagship phones.

Despite the astronomical numbers, smartphone growth is slowing in percentage terms, up a mere 38% in the past year compared to 46% between 2011 and 2012. One reason is that much of the low hanging fruit has been picked; many people in the developed markets of the west who were going to buy smartphones already have. Now comes the more difficult task of convincing them to keep buying new ones every couple of years, and digging into the lower end of the market where most of Earth’s less prosperous residents reside. The low-end still has quite a way to go: smartphones remain prohibitively expensive for vast numbers of people.