Android Phones to Dominate Through 2018, While iOS Phone Revenue Will Dazzle

NEW YORK (TheStreet) -- Google's (GOOG) Android smartphones will continue to dominate the global marketplace during the next four years, according to new predictions, but Apple (AAPL) iOS-based devices will drive revenue.


Based on the latest Worldwide Quarterly Mobile Phone Tracker survey from research firm IDC, Android will register 80% of all smartphones shipped worldwide and 61% of revenue by 2018. But, while iOS is expected to control only 13% of the total volume, it will deliver almost 34% of all revenue.

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Global smartphone shipments are expected to reach almost 1.3 billion units this year, which would be an increase of more than 26% over 2013. It's expected that 1.4 billion smartphones will be shipped in 2015, a 12.2% year-over-year growth rate. Smartphone shipments are expected to slow to about 1.9 billion units in 2018 for a 9.8% compound annual growth rate (CAGR) during the forecast period. Global Android phone shipments are expected to jump from 1.06 billion units this year to just under 1.5 billion in 2018. At the same time, iPhone shipments are predicted to rise from 178 million to 240 million.

Google shares were down 80 cents to $533 Tuesday morning, and Apple shares were up 19 cents to $115.26.

Smartphone revenue is a different story. The survey's authors believe that revenue overall will be hard hit by the increasingly cutthroat nature of pricing, resulting in a 4.2% CAGR over the same period.

Melissa Chau, an IDC senior research manager, said, "The impact of upstart Chinese players in the global market will be reflected in a race to the bottom when it comes to price. While premium phones aren't going anywhere, we are seeing increasingly better specs in more affordable smartphones."

She concluded, "The biggest question now is how much lower can prices go?"

Ramon Llamas, IDC Mobile Phones team's research manager, said, "As shipment volume slows, we expect greater attention to shift toward value trends. Apple's approach with premium pricing ensures a growing portion of overall revenues despite its declining market share."

He added, "Android's multi-faceted approach - with forked versions and low-cost Android One strategy -- will produce mixed results, yet it allows deeper penetration into emerging markets. That can lead to additional pressure on its vendor partners, who will need to seek greater differentiation in terms of devices and experiences in the hyper-competitive smartphone market."

The largest overall gains predicted in the survey should come from Microsoft's (MSFT) mobile products. According to IDC, while Microsoft's reach is relatively small in comparison to Android and iOS, Windows Phone shipments are expected to triple in the next four years -- from 35 million now to 105 million units by 2018 -- with market share and revenue expected to more than double during the same time period.

Other mobile operating systems are expected to experience growth spurts through 2018, but researchers believe they will continue to fight an uphill battle against the industry leaders.

IDC explains, "With Android volumes so dominant, it is no longer a possibility for new operating systems like Samsung's (SSNLF) Tizen and Firefox to compete on price alone -- any underdog OS must bring a radically different appeal to gain any significant traction."

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-- Written by Gary Krakow in New York.

To submit a news tip, send an email to tips@thestreet.com.

Gary Krakow is TheStreet's senior technology correspondent.

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