There are almost as many mobile phone subscriptions on the planet as there are people. At the end of 2012, the world had 6.7 billion mobile subscriptions, effectively covering 94% of the world's population. Aside from agriculture, no other industry in the history of the world has ever been this far-reaching. Accounting for duplicate SIM cards, there's a whopping 4.3 billion mobile phone users in the world, who own 5.3 billion mobile phones. When I say that smartphones are all the rage, I mean to say that 1.3 billion smartphones only accounts for 25% of all mobile phones. In other words, the growth opportunity for smartphones remains extremely ripe, being that there's potentially trillions of dollars of growth to be had, as smartphones continue toward the path of world dominance.
Death to dumber phones! As smartphone technology continues to advance, previous smartphone technologies are likely to become more cost effective, and should ultimately make its way into the lower end market. Currently, a price threshold of $250 for an unsubsidized smartphone has driven Google Inc (NASDAQ:GOOG) Android to become the current smartphone leader in terms of market share. At the end of 2012, IDC believed that Android maintained a dominating 68.3% market share. As Google's OEM partners are able to offer more phone for less money, it will put continued pressure on the feature phone market, and drive more eyeballs to Google's ecosystem.
Nokia Corporation (ADR) (NYSE:NOK) may become Android's next victim, since it shipped 79.6 million "dumb" devices last quarter, which declined 15% year over year, and accounted for nearly 65% of Nokia's net device sales. Smartphone shipments saw a 66% decline in volumes, and only made up 32% of the segment's revenue. The result of the smartphone decline is skewed, and can be largely attributed to the recent launch of Microsoft Corporation (NASDAQ:MSFT) Windows Phone 8.
Like Google Inc (NASDAQ:GOOG), Microsoft uses the power of its OEM network to drive support and distribution of its freshly-minted Windows Phone 8 ecosystem. Emerging markets remain a key focus for Microsoft, which has reportedly partnered with QUALCOMM, Inc. (NASDAQ:QCOM) to develop a Windows Phone 8 reference design for emerging-market OEMs. Devices based on the design are expected to ship in the latter half of the year.
Premium profits Compared to emerging-markets, the premium smartphone market where Apple Inc. (NASDAQ:AAPL) operates is undoubtedly more saturated. It isn't expected that Apple will necessarily increase its market share between now and 2016, but the smartphone industry is expected to grow by an average of 18.3% each year. Based on this growth rate, if Apple Inc. (NASDAQ:AAPL) just maintains its current smartphone share, it will have increased its volume by 65% in three years time. The power of compounding can have profound effects on Apple's earnings potential.