New research from Informa Telecoms & Media claims the smartphone market will see a huge shift in pricing over the next five years, as more than half of devices sold will be priced under $150.
Consumers often complain the likes of the iPhone are too dear, which leaves the likes of Nokia and ZTE to lead emerging markets in the Middle East and Asia with low-end devices, which are set to become the norm.
Comparatively, the high end market accounted for 85 per cent of smartphone sales in 2011, but will fall to 33 per cent in 2017 as buyers avoid paying above $250 for their phones.
The average price of a smartphone was at $188 in 2011 and it will continue to decline to $152, driven by a balancing act between the high-end phones sold in developed markets and entry-level devices in emerging ones.
The price drop will force OEMs to compete fiercely with each other, though some vendors will struggle to maintain profitability as a result.
Malik Saadi, principal analyst at Informa Telecoms & Media, said: "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.
"In any case, these players will have to align their pricing strategy with market demand if they want to survive. The new environment will make it hard for all vendors to achieve a balance between generating scale and maintaining decent margins."
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