A market pilot of the long awaited modular Ara phone will be released in Puerto Rico later this year. In January 2015 Google ATAP group held developers conference, where along with technical instructions and specifications for developers they revealed module design, packaging concepts and market outlook. The information about the project spreads very quickly making it more popular on the web and social networks. So it’s high time to make forecasts of how popular it will be in terms of real sales during the next several years.
IDC, a respected market research and analysis company, that specializes in information technology and telecommunications, recently published a research on smartphones market. It predicts a year-to-year growth of smartphone shipments in terms of units and US dollars. Smartphones were categorized by operating systems: Android, iOS, Windows and other OS. According to the research the total number of smartphones sold per year will rise from 1.3 billion in 2014 to 1.9 billion in 2018. The share of Android phones will stay approximately the same, or at about 80%. However, in terms of revenue, the share of Android device manufacturers will decrease from 67% to 60%. It is probably due to increasing popularity of cheaper Android devices in highly-populated developing countries. The total volume of smartphones sales is expected to reach $450 billion in 2018.
We have conducted some calculations of our own in addition to IDC data. First of all, we estimated initial modular phones shipments in 2015. The Ara market pilot will be launched in Puerto Rico only, where the mobile users base is about 3 million people. It is highly likely that locals will be interested in modular phones, but there won’t be a sudden wave of demand as people treat with caution every new concept device, which appears on the market. Consumers should get used to the new device, observe their friends experience with the modular phone and receive a kind-of-feedback from first users of these phones. So a very conservative estimate suggests that in its first year only 2% of Android mobile users in Puerto Rico would buy Ara phone, which is equivalent to 50,000 people.
We expect the emergence of modular phones in all countries by 2016, whereas the percentage of Android users who buy such devices will be 2%, the same estimate as for the first year in Puerto Rico. Also we don’t take into account a possible part of iPhone users who may switch to modular phones; this makes our forecast all more conservative. So in 2016 we expect 25 million users to own modular phones. This is a very impressive growth rate. But the real popularity modular smartphones will gain in 2017 and 2018. By then modular smartphones are expected to be widely discussed and promoted by media, internet and other means of communication. We believe that positive reviews from existing users will push the demand to the whole new level. A reasonable guess suggests that in 2017 the share of Android users who buy Ara phones will be 10%, and 30% in 2018 globally, which equals 140 and 450 million users respectively.
In terms of sales volumes it means that the market pilot in Puerto Rico will bring about $10 million, in 2016 the sales will rise up to $5 billion after to global launch. Consequently, in 2017 and 2018 modular phones market volumes are estimated to be around $25 and $80 billion respectively. $80 billion is an impressive figure that is comparable to movie industry revenue worldwide, or Microsoft’s total revenue from all business units, or annual GDP of Ecuador, a country with the population of 15 million.
After 2018 a new market factor will become visible – market saturation with endoskeletons; this will increase demand for different categories of modules, development of secondary modules market, etc. So the forecast is likely to become more complex but nonetheless intriguing.