Developing countries coming online this year are a key bright spot in an otherwise tepid market, according to IDC associate research director Melissa Chau. Shipments of 4G smartphones are expected to show double-digit uptake this year, driven by areas like Latin America, Central and Eastern Europe, and the Middle East and Africa, IDC said.
"It's been a long slog for 4G uptake in many emerging markets as 4G data tariffs have long been very expensive compared to 3G, while 4G handsets themselves have also been relatively pricey across the board," Chau said. "We are quickly seeing this change in key growth markets like India."
While Alphabet's Android ecosystem remains the most popular option in emerging markets, global smartphone saturation could put Apple at risk for negative growth in annual iPhone sales, IDC said. After three straight quarters of year-over-year declines in iPhone shipments so far, IDC estimates that iOS will end the year down 11 percent, while Android will grow 5.2 percent worldwide.
"By no means is this doomsday for Apple in this category and 2017 marks the tenth year of iPhone, so it is hard to believe Apple doesn't have something big up its sleeve," IDC's report said. "Challenges of low-cost competition remain, and Google getting into the premium space certainly doesn't make things any easier."
Apple CEO Tim Cook has cited "enormous" 4G investments in places like India as a big opportunity for the iPhone, but there are still key challenges there. The Indian iPhone 7 is expected to be up to $250 more expensive than in the U.S., nearing $900 — in a country where the average person made just $1,581.60 last year, the World Bank estimates.
"I think it's important to look not only at per capita income, but sort of look at the number of people that are or will move into the middle class over the next decade, and the age of the population," Cook told investors an earnings call. "The truth is, there's going to be a lot of people there, and a lot of people in the middle class, that are really going to want a smartphone. And I think we can compete well there. ... We're working very hard to realize that opportunity."