Though Apple Inc.’s iPhones may lag Android devices in terms of market share, Apple is expected to bring in $180 billion from its smartphones alone by 2021, according to a report from market intelligence firm IDC.
At the moment, Apple AAPL, +0.40% holds about a 14% to 15% share of the smartphone market, with Android making up the most of the rest, a trend IDC expects to continue. However, as Apple introduces higher-end offerings, such as the expected tenth-anniversary iPhone, Apple is expected to bring in a disproportionate amount of money due to its higher price point.
IDC predicts that Apple will command 36% of the device market value, the money spent on smartphones, leading to the $180 billion estimate. That number does not include money it could make off services related to the devices such as the App Store.
Apple sold $136.7 billion worth of iPhones in its 2016 fiscal year, down from a record $155 billion in 2015. The company has reported $112.5 billion in iPhone sales through the first three quarters of this fiscal year, and analysts project it to sell about $30 billion worth of smartphones in the current quarter, according to FactSet.
Apple’s rumored new iPhone, which IDC calls an “ultra-premium device,” is expected to come with a price tag of $1,000, which would make it the company’s most expensive phone to date. That will help push the overall average selling price of a smartphone to increase by more than 7% in 2017, IDC predicts.
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There appears to be demand for larger screens, as well as the accompanying features and higher price points. Besides Apple, Samsung Electronics Co. 005930, +0.43% introducing the Note 8 earlier this month after launching new Galaxy phones, all of which feature a full-screen front, and LG Corp. 003550, -1.55% is introducing a similar V30 smartphone. Alphabet Inc.’s Google GOOGL, +1.23% GOOG, +1.05% which makes the Android operating system, is expected to introduce a second-generation Pixel phone.
“By 2021, phablets will control slightly over 51% of the market, proving that bigger is most often better to most consumers,” said Anthony Scarsella, a research manager with IDC.
Still, Apple is expected to largely remain in second place to Android devices, which are expected to have 85.5% market share in terms of phone shipments, largely in line with its current share, by 2021.
Even with the much-anticipated September product launch, Apple is only expected to see 1.5% year-over-year growth in iPhone shipments. IDC notes that this is a big improvement over the 7% decline last year. The real benefits from the iPhone 8 launch are expected to kick in next year, as IDC and other analysts see the new phone kicking off a super cycle.
Shares of Apple gained less than 1% Wednesday. The stock has gained 9% in the past month, while the S&P 500 index SPX, +0.57% has lost 1%.
The only thing that could hold Apple and others back in the future is the growing concern that the smartphone market is becoming saturated.
“The big inflection point that everyone is watching for is when the smartphone market experiences its first year-over-year decline,” Ryan Reith, program vice president with IDC’s Worldwide Quarterly Mobile Device Trackers, said in the news release.
At the moment, the smartphone manufacturers appear safe from that fear, as about half of the world’s population is using a smartphone and the majority of users are replacing their devices every two years.
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