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Although Windows Phone will become the fastest-growing operating system (OS) in the next five years, it will only have a single-digit share of the smartphone market in 2017.Analysys Mason says Microsoft will only ship as many Windows Phone units by 2017 as Apple will ship in 2012.

market share

 

According to the Smartphone markets: worldwide trends, forecasts and strategies 2012–2017 report, Windows will be the fastest-growing OS in terms of number of shipments in the next five years, growing from 11 million units in 2011 to 136 million units by 2017. However, Windows smartphones will account for 9% of the world’s smartphone shipments in 2017, compared to Apple’s 23% and Android’s 58%.


The main obstacle the Windows Phone ecosystem will face is the “me too” factor. Already both the Android and Apple app stores are well defined and brimming to the top with feature rich applications. Do independent software developers really want to develop and support applications on yet a fourth platform. (If you include RIMs Blackberry in the argument)? For Windows phone to make any inroads on the competition, it will have to come up with a “killer” application or feature which other platforms can’t deliver. Unless it can achieve this, Windows Phone will remain a novelty amongst early adopters who are just wanting to be different.    

The other problem Window Phone faces is that its platform must perform equally as well or better that both the mature smart OS platforms from Apple and Google. Any kind of teething problems, service outage or security breach common with any new operating system, could destroy the credibility it has worked so hard to create. Microsoft smartphone OS needs to be the bridge between its desktop operating system and the technology mobility market which is rapidly replacing it.

Today the Android platform has become so mature that consumers have stopped comparing software and hardware features. Aesthetics, battery life and camera quality are the only differentiator between different vendors. Likewise in the Apple camp, the initial wow factor of the OS has pretty much stayed the same in the latest lineup of smartphones, and it is only the appearance of the device itself, which has been replaced with thinner, more aesthetically pleasing casings and better screen technology to differentiate between previous models.

However, the report indicates Android smartphones will account for 58% of smartphone shipments by the end of 2013, but will then stagnate and maintain that level of market share (despite a growing global market) for the next 4 years, largely because of a lack of other platforms from which to capture additional market share. “Having a third significant OS player like Windows in the smartphone market would benefit mobile operators because it would reduce Apple’s and Google’s control over the market,” explains Ronan de Renesse, author of the report. “It would also encourage subscribers to move from one OS to another, as well as improve operators’ negotiating position in smartphone retail.”

Furthermore, the analyst firm also predicts smartphone upgrades will drive three out of every four smartphone purchases by 2017, where today it is currently less than half. De Renesse says “this will create a significant strategy shift for stakeholders. Operators will have to increase the value of smartphone contracts by offering early handset upgrades and larger data allowances to retain customers, and handset vendors will have to develop stronger app and content ecosystems (as Apple has done) in order to increase loyalty.”

The report also indicates that smartphone connections will grow nearly threefold in the next five years to reach 3.4 billion in 2017. Smartphone shipments will rise from 700 million in 2012 (41.2% share of total handset shipments) to 1.37 billion by the end of 2017 (70% share of total handset shipments). However, the rate of growth in the rate of new smartphone connections will significantly decline – from 39% in 2011, to 29% in 2012. In 2013, this growth rate will decline further to 20%.   

Handset vendors’ share of smartphone shipments is predicted to be volatile in the next five years, as it has been previously (Nokia and Research In Motion (RIM) were among the top handset vendors as recently as 2011). Vendors with their own content and multi-device ecosystems such as Apple, Samsung and Sony Mobile or those with a strong presence in emerging markets such as Huawei and ZTE will maintain or increase their market share at the expense of others. Chinese manufacturers Huawei and ZTE will have a combined market share of 22.2% of smartphone shipments in 2017, up from 7% in 2011. “Value rather than volume has become a priority for top smartphone vendors. It results in an overcrowded high-end smartphone segment with huge marketing budgets.

 

Keeping up the pace set by Apple and Samsung will be tough and other manufacturers will require a lot of ingenuity, which we are starting to see,” de Renesse explains. Smartphones are the most important element of the 4G ecosystem, contributing more than 80% of 4G connections in developed markets by the end of 2017. Japan, South Korea and the USA lead smartphone-based 4G growth globally, and together account for 77% of 4G smartphone connections. Western Europe is expected to catch up by the end of 2013 when countries such as France, Italy, Spain and the UK further deploy their 4G networks.

By Angela Sutherland

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