Technology

Apple, Microsoft to Outpace Android Growth Through 2018

iPhone6
Source: courtesy of Apple Inc.
In 2013, for the first time, global smartphone sales grew to 1 billion units. Smartphones based on the iOS platform from Apple Inc. (NASDAQ: AAPL) and Android from Google Inc. (NASDAQ: GOOG) nabbed 94% of the market. In 2014, technology research firm IDC estimates the global market for smartphones will reach 1.29 billion units with a total value of nearly $383 billion.

By 2018, IDC forecasts unit sales of 1.87 billion smartphones with a total value of nearly $452 billion. Between 2014 and 2018, the compound annual growth rate (CAGR) in unit sales is a respectable 9.8%. The CAGR for value comes in at less than half that — 4.2%.

IDC attributes the slow value growth to the “increasingly cutthroat nature of pricing.” An IDC research manager said:

The impact of upstart Chinese players in the global market will be reflected in a race to the bottom when it comes to price. While premium phones aren’t going anywhere, we are seeing increasingly better specs in more affordable smartphones. Consumers no longer have to go with a top-of-the-line handset to guarantee decent hardware quality or experience. The biggest question now is how much lower can prices go?

So how are the units and, more important, the cash split up? In 2014, Android-based units are expected to sell a total of 1.06 billion units for an 82.3% share of the market. Apple is forecast to sell 178 million units for 13.8% of the market.

ALSO READ: A $949 iPhone

For 2018, IDC forecasts Android sales of 1.5 billion units (80% of the market) and iOS sales of 240 million units (12.8% market share).

Microsoft Corp.’s (NASDAQ: MSFT) Windows Phone platform is projected to grow from 35 million units sold in 2014 to 105 million units sold in 2018. Windows Phone’s CAGR is 31.4% during the five-year period, compared with a CAGR for Android of 9% and for iOS of 7.8%.

When it comes to the value of the sales, though, Apple still punches way above its weight. Android’s sales value grows from $255.1 billion in 2014 to $275.25 billion in 2018, a CAGR of 1.9%. Android’s share of sales drops from 67% to 61% over the five-year period.

The value of Apple’s sales grows from $116.5 billion in 2014 to $152.63 billion, a CAGR of 7%. Apple’s share of smartphone sales revenue grows from 30% to nearly 34%. Windows Phone’s share of sales rises from $7.8 billion to $19 billion, and its share of revenues more than doubles from 2% to 4.2%, for a CAGR of 25.1%.

ALSO READ: 5 Big Dow Dividend Hikes Expected Before 2014 Ends

Same as it ever was: Android leads in volumes and iOS dominates in revenues. The more things change, the more they stay the same.