GSMA Intelligence: Smartphones now account for half the world’s mobile connections

The developing world is set to add 1.6 billion smartphone connections between now and 2020. Led by India, China and Indonesia, smartphone adoption across developing markets will increase from an average of 47% in 2016 to 62% four years later, according to a recent GSMA Intelligence research brief. The report recommends that operators in the region focus on establishing an ecosystem that encourages smartphone usage, as well as pricing strategies that mitigate against potential cannibalisation of traditional mobile services by over-the-top (OTT) applications.

Smartphones accounted for 51% of mobile connections at the end of 2016, with smartphone penetration greater than basic and feature phone penetration in all regions except Sub-Saharan Africa. In the developed world, smartphone penetration was 65% at the end of 2016. Assuming there will continue to be some residual demand for basic and feature phones, as well as data-only devices, GSMA Intelligence expects only incremental smartphone growth in this region from 2018.

Attractive subsidy plans from operators combined with better-designed voice and data packages and targeted campaigns for young users have stimulated smartphone adoption. Fierce competition among handset vendors and component manufacturers has also resulted in an increasingly affordable and broad range of smartphone models in many markets. Furthermore, many first-time phone users have “leapfrogged” basic and feature phones and adopted smartphones.

The GSMA Intelligence Consumer Survey 2016 investigated mobile usage trends across 56 countries. The results show that smartphone owners in developing markets are as likely as their counterparts in developed countries to use IP messaging apps ahead of SMS. As the network effect of increased smartphone adoption and IP messaging takes hold in developing markets over the coming years, operators in the region will, therefore, face a similar, or potentially greater, threat to their voice and SMS revenues as those in the developed world have witnessed.

To mitigate against this threat, the report recommends that operators in developing countries look to offer smartphone content that is both accessible and relevant to local consumers and revenue-generating. With limited infrastructure in place in certain sectors, many developing countries hold considerable opportunities for value-added services that target the underserved. According to the GSMA Intelligence survey, the average frequency at which smartphone owners in the developing world access digital services, such as online shopping, government services or mobile banking, is around half that of the developed world. By focusing on the development of a smartphone ecosystem, combined with a data-centric pricing strategy, operators can stimulate mobile data usage and generate sustainable revenues from their early investments in mobile broadband infrastructure.

The full report can be downloaded here.