Cheap smartphones dominating handset race

The allure of cheaper smartphones is growing, with Ovum reporting that most of the growth in the global smartphone market out to 2020 will come from the sale of sub-US$100 devices.

And it's not just developing countries who are jumping onboard with the cheaper phones, with Ovum saying developed countries will also see growth in the cheaper devices.

"This price tier will represent more than 40% of global smartphone sales by 2020, up from 13% in 2014," the telecoms analyst firm says.

Ovum says handset prices are undergoing a steep decline: between Q4 2013 and Q4 2014 the median price of prepaid and Sim-free smartphones decreased 28%, from US$360 to US$258.

"This decline is largely attributed to a structural shift toward lower-end smartphone models rather than price decreases in particular segments," Ovum says.

Ovum says the low-end smartphone segment is also the most diverse and competitive part of the market, with more than 40 maunfacturers recorded in its study.

Ovum says total handset sales are expected to hit 2.2 billion units by 2020, up from 1.9 billion in 2014, with smartphones comprising 95% of global handset sales by 2020. That's a jump from 65% in 2014.

The news isn't so good for Microsoft's Windows Phone OS, which is predicted to capture just 4.2% market share – or around 86 million unit sales – by 2020. Android and iOS devices will continue to claim the lion's share, with 80% and 14% of the market respectively – almost identical to 2014 figures.

Ronan de Renesse, Ovum consumer technology practice lead analyst, says smartphones are leading the path to digital transformation and therefore have yet to unlock massive opportunities in many markets.

"The fact that almost all handsets to be sold in 2020 will be smartphones will lead to great socioeconomic achievements across the world in the next five years," de Renesse says.