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iPhone to keep punching revenue above its weight class

Gregg Keizer | June 10, 2014
While Android and Windows Phone smartphone ASPs are expected to drop through 2018, IDC bets Apple sticks to the premium plan.

Android's loss will be Windows Phone's gain, IDC predicted: The Microsoft OS's share of all smartphone revenue will jump from this year's 3% to 2018's 5%, totaling $24.7 billion by the latter.

Among the assumptions in IDC's prognostication was that carriers, notably those in the U.S., would continue to heavily subsidize the iPhone, effectively reducing consumers' out-of-pocket expense and maintaining high shipment volumes.

"Carriers don't want to shut off that [iPhone] faucet," Llamas argued. "But they will become more and more selective on how much they spend for those subsidies."

If Apple holds the price line, it has a good chance of keeping a grip on a third of all smartphone revenue, perhaps even growing that share, as Android and Windows Phone smartphone prices continue to drop.

Llamas didn't know when prices would reach rock bottom, a place where paper-thin margins prevented additional price cuts for manufacturers who could not monetize the hardware through secondary revenue streams like services, but he was confident that that point was outside IDC's five-year crystal ball.

"It's beyond our forecast horizon," Llamas asserted. "There's still room for some spectacular growth, something that will require prices to come down even more."

Not required for Apple, apparently.

Smartphone price chart
iPhone ASPs will drop a measly 8% in the next five years, leaving it with nearly a third of total smartphone revenue even as share of shipments dips. (Data: IDC.)


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