Worldwide shipments of smartphones are expected to see significant growth by the end of this year helped along by a constant drop in prices, according to a new report from the International Data Corporation, or IDC.

According to the report, worldwide smartphone shipments are expected to exceed 1 billion units in 2013, representing a 39.3 percent growth over 2012. While many mature markets are nearing smartphone saturation, the growth is mostly attributed to the demand for low-cost computing in emerging markets, and a sharp decline in the average selling prices, or ASPs, of smartphones.

“The game has changed quite drastically due to the decline in smartphone ASPs,” Ryan Reith, program director at IDC, said in a statement. “Just a few years back the industry was talking about the next billion people to connect, and it was assumed the majority of these people would do so by way of the feature phone. Given the trajectory of ASPs, smartphones are now a very realistic option to connect those billion users.”

The report estimated that, by 2017, total smartphone shipments would reach 1.7 billion units, resulting in a compound annual growth rate, or CAGR, of 18.4 percent from 2013 to 2017.

According to IDC, Google’s (NASDAQ:GOOG) Android mobile-operating system has enabled many new manufacturers to enter the smartphone market, and focus on low-cost devices as a way to build brand awareness and achieve greater sales volumes.

In 2013, IDC expects smartphone ASPs to be $337, down 12.8 percent from $387 in 2012. The research firm believes this trend will continue in the years to come, and smartphone ASPs are expected to gradually drop to $265 by 2017.

“The key driver behind smartphone volumes in the years ahead is the expected decrease in prices,” Ramon Llamas, research manager at IDC, said. “Particularly within emerging markets, where price sensitivity and elasticity are so important, prices will come down for smartphones to move beyond the urban elite and into the hands of mass market users.”

From a volume perspective, emerging markets including Asia Pacific, Latin America, and Middle East and Africa are expected to post double-digit growth rates from 2013 to 2017, while North America is predicted to post a growth rate of 7.8 percent during this period.


In addition, the Asia Pacific region is also expected to experience significant growth in market share from 2013 to 2017. Developed markets, by contrast, are projected to see market share erosion. From a price perspective, ASPs in emerging markets are likely to post declines in CAGR between 2013 and 2017, enabling more users to afford smartphones for the first time.

Check out the table here: