Low-cost handsets to account for over half of all handset by 2014, says to Juniper Research

Low-cost handsets and smartphones will together account for almost 79% of all new handsets by 2014, or just over one billion units in all, according to Juniper Research. Operators and vendors are preparing to deal with a massive influx of new users from low-income socioeconomic groups in developing markets and a rising demand for complex 'smart' devices from affluent users in developed markets.

The research firm said that the handset market is becoming increasingly polarized between low-cost handsets for emerging markets and high-end smartphones for developed regions – with the mid-range handset market being squeezed.

Vendors such as Nokia, Apple and Research In Motion (RIM) are well positioned to benefit from these trends whilst players operating more in the mid-range market such as Sony Ericsson and Motorola have to rethink their strategy.

Andrew Kitson, analyst at Juniper Research, said "Low-cost handset shipments will number more than 700 million in 2014, up by 31% from levels seen in 2008, albeit down slightly from a peak of 716 million in 2012 as some users begin to upgrade to costlier devices. At the same time, smartphone shipment volumes will grow continuously, reaching almost 360 million by the end of the period. We therefore expect that mid-range device sales volumes will fall by more than 41% over the period".

Take-up in emerging markets will be boosted by the availability of low-cost, highly targeted localized information services, such as Nokia's Life Tools offering, the research firm added.

In 2008, the Indian Sub Continent region accounted for the majority (23%) of low-cost handset sales, due to efforts by operators such as Vodafone to meet low-income users' needs in markets such as India. By 2014, the region will account for 22% of sales.