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Within as little as three years, 69 percent of the planet’s population will own a smartphone. That’s 5.2 billion people with a smartphone by 2017, from Abuja to London, Mumbai to Zagreb. As the market continues to expand, it gets closer to saturation point. What impact will this have on the average sales price of these increasingly ubiquitous devices?

Sales of higher-priced smartphones set to decline

Sales of high-end smartphones – priced US$500 and above – increased by 24 percent year-on-year in 2013. That’s 2.5 times more than the market grew in the same period. This rapid expansion was driven primarily by the emerging regions due to superior purchasing power and early adoption in developed markets of Asia Pacific, North America and Western Europe. These regions represented 61 percent of high-end smartphone sales globally in 2013.

But our forecasts indicate that the balance of spend on high-end devices is already shifting to emerging regions, with China leading the way (see chart above). The Middle East and Africa and Emerging Asia are becoming the fastest-growing regions for high-end smartphones as their consumer base broadens. Here, current growth rates are leaving the developed regions behind – and they offer significant potential for continued expansion. But just how long can this growth last?

Having enjoyed a compound annual growth rate (CAGR) of +48 percent for the past three years, the high-end market is set to decline soon. We forecast the high-end smartphone market will slow in 2015 to +8 percent year-on-year. The decline will be driven by a combination of the market for smartphones approaching maturity in the developed regions, and the aggressive promotion of cheaper devices that have significant scope for growth in the emerging regions. By 2015, lower priced devices will be on the ascendancy.

That’s not to say that the unit price of high-end handsets will fall: we expect price levels to remain consistent, but the premium for high-end will continue to increase. In 2013, the high-end annual selling price was only 1 percent lower than three years earlier in 2010, but in the same period the premium for high-end smartphones rose by 19 percent. As more lower-end devices come to market, we expect the premium price gap to widen further. This will have the effect of making the high-end look overpriced, adding further pressure on unit sales.

This article was originally published on GfK.