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Smartphone Gains Continuing Into Q4

NEW YORK – Analysts forecast strong fourthquarter smartphone growth in the U.S. in a continuation of gains driven this year by new products, aggressive service-plan promotions by carriers to steal competitors’ subscribers, and trade-up plans that encourage consumers to trade in phones more frequently.

“iPhones will lead growth in what will be an exploding smartphone segment,” said Stephen Baker, NPD’s VP of industry analysis.

For the year, IHS forecasts North American smartphone shipments will rise 13.8 percent to 138.3 million units following 2013’s 12.9 percent gain, and shipments will grow another 8.1 percent in 2015 despite market maturity.

Many of the new products entering the market in the quarter are big-screen phablets, which appeal to people who intensive app users. Apple increased the screen sizes of its phones to 4.7 and 5.5 inches, Verizon’s Motorola-made Droid Turbo features 5.2-inch Quad HD display, and AT&T launched Samsung’s 6-inch Galaxy Mega 2 phone.

Big screens and other new features, such as the Droid Turbo’s 4K video capture, 24-hour battery, and quick-charging capability, are giving consumers big reasons to upgrade, and upgrades are driving the market.

IHS senior telecom analyst Wayne Lam attributed this year’s growth primarily to demand for newer and better smartphone designs. “We see that phenomenon happen every year with the iPhone introductions. However, carrier incentives and offerings do [also] help grease the wheels, and the new installment plans and plans with no contracts encourage consumers to upgrade more frequently.”

NPD’s Baker agreed. “A renewed level of competition between the carriers, lower entry pricing to get consumers into smartphones, and plans that enable faster upgrades are a [growth] catalyst,” he said. NPD doesn’t expect a lot of the fourth-quarter gain to come from the new carrier upgrade plans because “we are barely a year into the introduction of those plans,” but he said “the promise of them, and lower pricing, are proving to be a real driver of volume.”

Apple’s two new iPhones will also contribute to growth “after a couple of lackluster upgrade cycles,” he said.