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One Billion… And Counting

Like one of those old-school prize meters on “The Price is Right,” the smartphone market just smashed through another significant level.

Market research firm, IDC, just reported that for the first time ever in a single year, global smartphone shipments topped the one billion mark in 2013. The 1.004 billion total represented a 38.4% jump over shipments in 2012 – and analysts are calling for a further 26% rise this year.

But here’s a surprise…

IDC says 55% of the phones shipped last year were smartphones.

Just 55%? You’d expect that figure to be closer to around, say, 80% or 90%, right? Especially given how the world has shifted from “dumb” phones to smartphones over the past few years.

Nevertheless, within the growing smartphone world, there’s another interesting trend…

The Battle for the Bargain Hunters

For all the fierce competition between handset makers to design the coolest, flashiest phones, there’s a new battleground: the bargain bin.

Ryan Reith, Program Director of IDC’s Worldwide Quarterly Mobile Phone Tracker, sums it up: “Among the top trends driving smartphone growth are large screen devices and low cost. Of the two, I have to say that low cost is the key difference-maker.”

How low?

My colleague, Louis Basenese, reveals, “Cheap smartphones, selling for less than $150, will account for the majority of smartphone sales this year.”

We’ve noted this here before. Consumers in places like China and India simply can’t afford expensive, high-end smartphones. In China, for example, phones typically range between $130 and $200.

That reality has priced the likes of Apple (AAPL) out of the market (although iPhone activations during the fourth quarter hit a record and its recent deal with China Mobile (CHL) bodes well for the future.)

Meantime, Samsung’s (SSNLF) 43% smartphone growth during the quarter saw the company extend its overall market share lead to 31.3% share, while Apple’s share has dropped to 15.3%.

And grabbing the third spot…

Up, Up and Huawei

China’s biggest smartphone manufacturer enjoyed a stellar 2013.

Huawei just reported that it expects to notch an operating profit of $4.9 billion for the full year. That’s up 40% on 2012.

The company said much of the growth came from emerging markets – the very same countries looking for cheaper smartphones.

Huawei is confident of even more growth in its home country, as China continues to improve its telecom infrastructure. The country also recently issued commercial 4G wireless licenses to its three state-owned carriers – China Mobile, China Telecom (CHA) and China Unicom (CHU).

Huawei should see the benefits of that – both from demand for its handsets, plus its flagship networking business, as more subscribers use more data and apps.

Such growth is just as well, too, given the company’s muted growth in developed nations like the United States and Australia.

Much of that is due to security concerns and its ties with the Chinese government and military and the fact that company founder, Ren Zhengfei, was a former member of the People’s Liberation Army.

For the record, Huawei denies any allegations of shady business and says its employees own the whole company.

Regardless, the fact that the smartphone market just hit the annual one-billion shipments landmark shows that the global proliferation of these devices continues at a rapid pace.

And while the world obsesses over Samsung and Apple, the rising tide is lifting other boats like Huawei, too.

Ahead of the tape,

Martin Denholm

Martin Denholm

, Managing Editor

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