China Surpasses U.S. in Smartphone Volume

The American media and consumer electronics research groups tend to focus on the state of the smartphone market in the United States. Reports cover the market shares of firms that compete in the phone, operating system and tablet businesses, with the focus on Google Inc. (NASDAQ: GOOG), Apple Inc. (NASDAQ: AAPL), Amazon.com Inc. (NASDAQ: AMZN) and Samsung. Carrier market share also is watched carefully, particularly the race between Verizon Wireless and AT&T Inc. (NYSE: T). All the while analysts have spent time reviewing the American market, China has taken the crown as the world largest smartphone market, and the most critical battleground for market share has moved outside the United States.

One significant report about the Chinese market recently showed that Apple had dropped to seventh place in smartphone share. That may change with the introduction of the iPhone 5, but the magnitude of the problem becomes obvious in a new report from research firm IDC.

Data from the IDC Worldwide Quarterly Mobile Phone Tracker shows that China will account for 26.5% of all smartphone shipments in 2012, compared to 17.8% for the United States.

India has moved into third place with a share of 2.2%, but its growth between 2011 and 2016 on an annual basis is expected to be 57.5%, which is much more rapid that any other market of size.

The increase in market share in nations like India and China will be fueled largely by a generation of phones, mostly powered by Android, that have price points below $200. That will pose a particular challenge to Apple, which continues to price the iPhone at the very top end of the market

Smartphone companies based in North America — particularly Apple, Research In Motion Ltd. (NASDAQ: RIMM) and Google — produce expensive smartphones. The brand new Galaxy Nexus from Google carries a price as high as $349, which puts it outside the budgets of many people in the developing world.

The attention of analysts who watch the smartphone market has slowly turned to China. The state of the sector in India gets almost no mention. Within the next two or three years, that is bound to change significantly.

Douglas A. McIntyre