Gartner Survey of CIOs in Asia Pacific and Japan Finds That 35 Percent of IT Funding Comes From Outside the IT Budget

IT Leaders in Asia Pacific and Japan Use Public Cloud Services and Outsource More Than Their Global Counterparts

Kuala Lumpur, May 20, 2014 — Chief Information Officers (CIOs) in the Asia Pacific and Japan (APJ) region reported increases in conventional IT budgets for 2014 of 0.9 percent, but estimated that only 65 percent of IT is funded from within the conventional IT budget, according to the annual global survey of CIOs by Gartner, Inc.'s Executive Programs.

APJ IT leaders reported increases in IT budgets for 2014 that exceeded the global average, 0.9 percent compared with 0.2 percent globally.

“APJ businesses expect IT to support growth and are increasing IT budgets accordingly,” said Gartner vice president Andy Rowsell-Jones. “Although not a large increase, this growth in IT budget at least allows APJ IT leaders to prepare the ground to capture the digital opportunities appearing in 2014.”

More notable, given the growth of the conventional IT budget, is the proportion of IT spending funded from outside of IT. In contrast to the global average, where 73 percent of IT funding is estimated to be funneled through the conventional IT budget, only 65 percent is estimated in APJ, leaving 35 percent of IT spend to be funded by marketing and other buying centers of IT services, such as sales, operations and R&D.

“This high level of unconventional funding from outside IT, while aiding growth, may contribute to integration issues in the short term and governance in the long term,” said Mr Rowsell-Jones.

Filling the digital leadership vacuum
According to the Gartner report, most businesses have established IT leadership, strategy and governance, but have a vacuum in digital leadership. Only 11 percent of APJ businesses have appointed a chief digital officer. Although this is higher than the global average of 6 percent, Gartner believes that to exploit digital opportunities and ensure that the core of IT services is ready, there must be clear digital leadership and all business executives must become digitally savvy.

“Whether your enterprise has a CDO or not, we recommend that CIOs contribute to and, if necessary, lead the discussion about the implications of the ‘digital dragon’ on the enterprise. We expect the CDO role to become more common over the next five years. We expect its scope to grow, too.”

Across the globe, 42 percent of CDOs are currently focused on digital marketing, but this number is falling as more CDOs become true advisors on digital business strategy to the CEO and board of directors, and so they move into the arena of business strategy.

Technology focus
The top technology spending priorities of APJ CIOs for 2014 reveal two complementary goals: exploiting new technologies and trends, and renovating the core of IT.

Cloud was nominated as the top area for new technology spending by CIOs in APJ. Nearly one-third of APJ businesses are enthusiastic adopters of public cloud, indicating significant investments in the drive for greater agility. This places them ahead of their global peers: 31 percent of APJ CIOs say they have invested significantly in cloud compared with 25 percent globally.

Organizations in this region are greater users of public cloud services, especially platform as a service (PaaS) and infrastructure as a service (IaaS), but lower users of software as a service (SaaS) than the global average. Only 56 percent of APJ respondents are using SaaS, whereas this figure is much higher globally (72 percent). This implies that the majority of cloud services are being consumed by the IT function rather than business units directly.

“It’s unsurprising that investment in mobile app development and device management ranks second, given the rapid growth in adoption of mobile-data-enabled smartphones and tablets, the increased popularity of BYOD, and the explosion in the number of devices capable of participating in the Internet of Things,” said Mr. Rowsell-Jones. “This is followed by business analytics in third place, as enterprises in this region seek to better understand and manage the drivers of business performance.”

The second area of significant investment for APJ IT leaders is renovating the core of IT — in other words, ensuring that the infrastructure, as well as the main IT applications and services, such as data center, ERP and networks, are fit for purpose to ensure that the core is digital-ready.

Towards strategic sourcing
IT leaders across APJ have long embraced strategic sourcing, mixing in-house with sourcing from offshore captive units, contractors and fully fledged outsourcers. The survey data bears this out, showing APJ to be slightly above of the global average when it comes to mixed or outsourced arrangements.

Only 19 percent of CIOs in APJ reported having wholly or mainly insourced IT arrangements, compared with 27 percent globally. A mixed model was used by 66 percent of APJ respondents (63 percent globally) and 14 percent were wholly or mainly outsourced, compared with a global average of 10 percent.
This is only the beginning, however. IT leaders across APJ intend to embrace strategic sourcing even more wholeheartedly, with 77 percent expecting to change their sourcing arrangements in the next three years.

Building bimodal capability
To address the age-old tension between needing to provide slow and steady IT (for critical systems), while responding "at the speed of digital" (for innovative, differentiating opportunities), digital-savvy IT leaders are managing their IT organizations in two modes: traditional and nonlinear.

APJ is slightly in front with the adoption of this model, with 48 percent of respondents saying they operate some form of bimodal IT, in contrast with the global average of 45 percent.

“If you are not already bimodal, consider experimenting with separating conventional and "nonlinear" IT work streams, with conventional looking after more traditional waterfall development projects, and nonlinear looking after more short-term, agile and lean startup opportunities,” said Mr. Rowsell-Jones.

More information is available in the report ‘2014 CIO Agenda: An Asia/Pacific and Japan Perspective’, available on Gartner’s web site at: http://www.gartner.com/doc/2687717

Gartner Announces Malaysia’s IT Spending on Pace to Grow 7.4 Percent in 2014

Kuala Lumpur, April 4, 2014 — With the global economy showing signs of a gradual recovery, Malaysia’s total IT spending is forecast to grow 7.4 percent to reach RM68 billion in 2014. On the other hand, worldwide IT spending is on pace to total $3.8 trillion in 2014, a 3.2 percent increase from 2013 spending, according to the latest forecast by Gartner, Inc.

"Globally, businesses are shaking off their malaise and returning to spending on IT to support the growth of their business," said Richard Gordon, managing vice president at Gartner. "Consumers will be purchasing many new devices in 2014; however, there is a greater substitution toward lower cost and more basic devices than we have seen in prior years."

The Gartner Worldwide IT Spending Forecast is the leading indicator of major technology trends across the hardware, software, IT services and telecom markets. For more than a decade, global IT and business executives have been using these highly anticipated quarterly reports to recognize market opportunities and challenges, and base their critical business decisions on proven methodologies rather than guesswork.

The devices market (including PCs, ultramobiles, mobile phones and tablets) is forecast to return to growth in 2014, with worldwide spending of $689 billion, a 4.4 percent increase from 2013 (see Table 1). However, in top-line spending, a shift in the product mix continues to be seen in the marketplace. Demand for highly priced premium phones is slowing, with buyers in mature countries preferring midtier premium phones, while those in emerging countries favor low-end Android basic phones.

The number of traditional PC users is contracting to a set of fewer, albeit more engaged, users. In general, consumers are opting to buy premium ultramobiles as notebook replacements and purchasing tablets as additional devices. As market power shifts to the buyer, and key product innovations become ubiquitous, product pricing is becoming the primary differentiator.

Table 1. Worldwide IT Spending Forecast (Billions of U.S. Dollars)

	2013  Spending	2013 Growth (%)	2014 Spending	2014 Growth (%)
Devices	660	-1.4	689	4.4
Data Center Systems	140	-0.2	143	2.3
Enterprise Software	299	4.9	320	6.9
IT Services	922	1.8	964	4.6
Telecom Services	1,633	-0.5	1,655	1.3
Overall IT	3,654	0.4	3,771	3.2

Data center systems spending is projected to reach $143 billion in 2014, a 2.3 percent increase from 2013. In terms of enterprise network equipment trends, cloud and mobility are the biggest demand drivers. Virtualization and cloud adoption are generating significant market traction for data center Ethernet switches, and the proliferation of mobile endpoints is continuing to drive significant demand for the wireless LAN equipment market.

In the enterprise software market, spending is on pace to total $320 billion, a 6.9 percent increase from 2013. The enterprise software market is the fastest-growing segment in 2014. "The Nexus of Forces (the convergence of social, mobile, cloud and information) continues to drive growth across key major software markets, such as CRM, database management systems (DBMSs), data integration tools and data quality tools," Mr. Gordon said. "In fact, organizational adoption of data management technologies to support the Nexus will cause spending on DBMSs to surpass operating systems, making the former the largest enterprise software market in 2014."

IT services is forecast to total $964 billion in 2014, up 4.6 percent from 2013. IT services buyers are shifting spending from consulting (planning projects) to implementation (doing projects), and Gartner analysts expect steady growth in the IT services market as the economic outlook, and along with it investment sentiment, improves.

Telecom services spending is projected to grow 1.3 percent in 2014, with spending reaching $1.655 trillion. Fixed voice services continue to decline from substitution effects occurring a bit faster than previously anticipated, affecting the balance of wireless-only households in important markets, such as Japan, as well as the migration of enterprise lines due to Session Initiation Protocol (SIP) trunking (the use of voice over IP (VoIP) to facilitate the connection of a private branch exchange (PBX) to the Internet).

Gartner Says Asia Pacific Offshore Services Providers are Still Growing but Facing Increasing Competition

Ongoing cost pressures in Europe are driving some multinational corporations to consider moving their offshore services from mid-cost countries like Malaysia

Kuala Lumpur, March 28, 2014 — Countries in Asia Pacific offer cost-competitive, typically stable and scalable locations for offshore IT and business process services, but Latin American and Eastern European countries now compete more aggressively for offshore deals, according to new research from Gartner, Inc.  Analysts said currency fluctuations and rising delivery costs are also an issue for Asia.

In its latest assessment of nine Asia Pacific countries as potential offshore service locations, Gartner says India is the clear global leader by revenue, while China is the most serious challenger by scale. Bangladesh, Indonesia and Vietnam are continuing to gain regional traction for offshore service delivery, while more mature countries, such as Malaysia and the Philippines, are refocusing on their core capabilities of higher-end IT infrastructure, help desk, application and business process services.

With an average of 19 percent of total planned applications spending for 2014 being directed offshore globally, sourcing managers are taking a keen interest in which offshore locations their services are delivered from, according to Gartner research vice president Jim Longwood.

“Although the use of Asian countries for offshore or nearshore services has not yet peaked, we are seeing some distinct changes in demand and supply patterns in the region,” Mr. Longwood said.

“Ongoing cost pressures in Europe are driving some multinational corporations to consider moving their offshore services from mid-cost countries like Malaysia to lower-cost locations in Asia, Eastern Europe and Latin America. Some Western countries are becoming more protectionist, which is also having a negative impact on demand for offshore services from Asia Pacific.”

Cost increases — either due to currency exchange and/or increases in cost for local resources and infrastructure — are affecting the ability of India and China to be as cost-competitive as they have been. However, service providers are also taking advantage of market changes to revise their business strategies, according to Gartner.

“With demand slowing in Europe and North America, we have seen a range of Indian providers expanding their regional Asian presence and leveraging their nearshore capabilities,” said Mr. Longwood. “As a result, they are growing their presence in more mature markets like Singapore and Malaysia, and are now challenging the traditional MNC application service providers in these markets.”

According to the report, there has also been some market consolidation, with an increase in vendor alliances, mergers and acquisitions with offshore providers in Asia Pacific as they seek growth and scale.

Enforcement of laws for data/IP security, privacy and legal maturity continue to be an adoption barrier for using emerging low-cost countries, despite country governments improving related policies and regulations. All nine countries were rated either ‘poor’ or ‘fair’ on the data/IP security and privacy criterion.

Gartner recommends that organizations conduct thorough due diligence on the overall costs of delivery, addressing risks like ongoing hiring, training, legal processes, IP, security and privacy, as well as attrition. Although some less mature emerging Asian offshore locations appear attractive from a cost perspective, a range of burdensome "soft costs" could quickly erode initial cost savings.

Many Japanese enterprises perceive increased risk in using China as a nearshore option and are looking at other options. For example, there is increased interest in Malaysia and Myanmar, and some are investigating a type of "rural sourcing" for onshore locations like Hokkaido, Okinawa and Kyushu.

Emerging economies like Indonesia, Bangladesh, Sri Lanka and Vietnam continue to have excellent cost advantages. This advantage needs to be balanced against low ratings for language, government support, the labor pool and infrastructure. It is also important to consider their immature legal business environment that offers limited protection for foreign investors. The quality of resources is also becoming a point of concern in low-cost destinations.

Historically, cost attractiveness, quality of service and scalability have been key drivers for using Asia as an offshore outsourcing destination. However, in the last few years, growing concern about high inflation, attrition and quality lapses in offshore and nearshore locations has been driving CIOs to consider alternatives such as low-cost onshore sourcing and sometimes crowd sourcing.

Despite these trends, India and China are still among the most popular destinations for offshore services. Over 48 percent and 45 percent of clients surveyed in 2012 were using these countries for nearshore or offshore outsourcing respectively.

Gartner has conducted analyses of 30 countries and published documents on the 15 leading offshore countries from across the globe to assess their capabilities and potential as offshore service locations, to help sourcing managers and service providers choose the best offshore locations for meeting their requirements for captive or outsourced IT and business process services.

This year’s Asia Pacific report includes the emerging IT economies of Bangladesh, Indonesia, Sri Lanka, Thailand and Vietnam, along with the more mature offshore locations of China, India, Malaysia and the Philippines. Developed countries such as Australia, Hong Kong, New Zealand, Singapore, South Korea and Taiwan are not included but should still be considered important nearshore location options.

Gartner Says by 2017 Your Smartphone Will Be Smarter Than You

Kuala Lumpur, March 24, 2014 — Smartphones will soon be able to predict a consumer’s next move, their next purchase or interpret actions based on what it knows, according to Gartner, Inc. This insight will be performed based on an individual’s data gathered using cognizant computing — the next step in personal cloud computing.

“Smartphones are becoming smarter, and will be smarter than you by 2017,” said Nick Ingelbrecht, research director at Gartner. “If there is heavy traffic, it will wake you up early for a meeting with your boss, or simply send an apology if it is a meeting with your colleague. The smartphone will gather contextual information from its calendar, its sensors, the user’s location and personal data.”

“Mobile phones have turned into smartphones thanks to two things: technology and apps,” said Mr. Ingelbrecht. “Technology has added features such as cameras, locations and sensors, while apps have connected those to an array of functions that, for the most part, add and improve our day to day life from a social, knowledge, entertainment and productivity point of view.”

What smartphones can do through apps has improved and broadened thanks to the personal cloud. “We assume that apps will acquire knowledge over time and get better with improved predictions of what users need and want, with data collection and response happening in real-time,” said Mr. Ingelbrecht.

The first services that will be performed "automatically" will generally help with menial tasks — and significantly time consuming or time wasting tasks — such as time-bound events (calendaring) such as booking a car for its yearly service, creating a weekly to-do list, sending birthday greetings, or responding to mundane email messages. Gradually, as confidence in the outsourcing of more menial tasks to the smartphone increases, consumers are expected to become accustomed to allowing a greater array of apps and services to take control of other aspects of their lives - this will be the era of cognizant computing.

By 2017 mobile phones will be smarter than people not because of an intrinsic intelligence, but because the cloud and the data stored in the cloud will provide them with the computational ability to make sense of the information they have so they appear smart. “Phones will become our secret digital agent, but only if we are willing to provide the information they require,” said Mr. Ingelbrecht. Regulatory and privacy issues, as well as the level of comfort users will have in sharing this information, will differ considerably across age groups as well as geographies.

To reach a complete personal cloud experience, cognizant computing consists of four stages: Sync Me; See Me; Know Me; Be Me (see Figure 1). Sync Me and See Me are currently happening, while Know Me and Be Me are still to occur.

There are two aspects of how cognizant computing will impact the market. It will have an impact on hardware vendors and on the other services and business models.

Hardware vendors will continue to face the challenge of hardware commoditization as ecosystem owners will focus on shifting consumers’ focus away from the hardware and onto their services and brands. With the move into a cognizant computing world, the battle to own the consumer will intensify as vendors will try and control the data in the cloud, and through that the relationship with the users. Hardware vendors will unlikely be credited with the good, but surely be blamed about the ugly when the device fails to deliver. The device will be seen as dumb rather than the malfunctioning of the real brain: the cloud.

Over the next two to five years, cognizant computing will become one the strongest market forces affecting the entire ecosystems and value chains across IT. Monetization will flow from the increased knowledge of the consumer and the fine-tuning of offers that can now be achieved, and are increasingly perceived as personal and highly relevant — which should lead to an increase in spend. The mobile commerce opportunities are vast as the smartphone is empowered to make purchases via the consumer’s mobile wallet or credit card, all via their mobile phone. “It is about having the right rules and permissions in place set by the user so that only actions that are pre-approved will happen — rather than the smartphone making ‘rogue’ purchasing decisions,” said Mr. Ingelbrecht.

While Gartner said privacy will be an issue for some consumers, for many it will only be an issue if they do not get enough in return for their personal data. Consumers tend to give up a lot for convenience. The benefit of certain apps might instigate behaviors that were unthinkable yesterday.

“Mobile phones have been our trusted companions for years channeling the natural need we have to communicate with others and express ourselves first with voice, then with the internet, and more recently through applications,” said Mr. Ingelbrecht. “Smartphones, their technology and operating systems have been radically changing other devices from PCs to televisions. The era of personal cloud is empowering users as well as devices to get access to and share more and more data. Over the next five years, the data that is available about us, our likes and dislikes, our environment and relationships will be used by our devices to grow their relevance and ultimately improve our life.”

Gartner Announces Malaysia’s Business Intelligence Market to Reach US$30.4 million in 2017

Data Discovery and Mobility Create a Revival in Spending in Asia Pacific

Kuala Lumpur, 25 February, 2014 — The market for business intelligence (BI) platforms in Asia Pacific is expected to grow 7.4 percent to reach almost US$1.4 billion in revenue in 2014 and more than $1.6 billion by 2017, as data discovery and mobility create a revival in spending by business users, according to Gartner, Inc.

The author of a new report on the competitive landscape for BI platforms in Asia Pacific, Gartner research director Bhavish Sood, said growing interest in big data solutions will continue to positively impact BI spending across Asia Pacific in 2014 and beyond.

“Information intensive initiatives are popular in organizations in Asia Pacific's accelerating economies, because information is a competitive differentiator,” Mr Sood said. “We expect this to continue as organizations pursue regulatory compliance, performance management and overarching enterprise information management initiatives.”

In Asia Pacific, the top four "megavendors" — SAP, Microsoft, Oracle and IBM — controlled 72.2 percent of the BI platform market in 2012, up from 65 percent in 2011. However, Gartner analysts said that business units increasingly prefer data discovery solutions, such as Tibco Spotfire, QlikTech and Tableau Software, while their counterparts in IT are still more comfortable procuring from megavendors.

“Given the current economic climate of slow growth, CIOs are looking for solutions that need minimum servicing and can deliver fast time to value. These demands are being met by packaged analytical applications, preconfigured BI appliances and intuitive data discovery tools,” Mr Sood said.

Malaysia will continue as the second-largest BI market in the Association of Southeast Asian Nations (ASEAN), after Singapore. The need to increase Malaysia's competitiveness against China's and that of other neighboring ASEAN countries and renewed focus on depending less on tourism and the oil industry will help drive BI growth. Malaysia's investment in infrastructure is proving to be a good advantage for attracting foreign investments. Gartner expects the market to reach $30.4 million by 2017. Telcos and financial services are among the most sophisticated adopters of BI.

Singapore is one of the most-developed BI markets within Asia/Pacific, and it will remain the third-largest BI market through 2017. Singapore's BI forecast outlook remains positive, with expected revenue of $95.9 million. With increasing competition from China and lower-wage neighboring countries, such as Malaysia and Vietnam, Singapore has countered by diversifying into new vertical industries, such as biotechnology and high-tech manufacturing. It is also continuously enhancing its well-established industries, such as banking and other service-related industries. In addition, as a well-developed country, Singapore will have a more-stable maintenance revenue stream, which will become more pronounced in the event of another slowing global economy.

China will remain the second-largest BI software market in Asia Pacific through 2017, reaching US$217.3 million. Most often, BI solutions in China are used tactically in departmental deployments — as a reporting tool, rather than as a strategic platform to build up analytic capabilities to support decision making. Chinese organizations' relatively low-level maturity of the demand and supply sides of IT and analytic professionals creates extra challenges for BI technology adoption in China.

According to Gartner research director Daniel Yuen, China will be the next battleground for vendor market share.

“In the past, due to cultural and market issues, many vendors hesitated before planning an entry into China. However, this is changing, and vendors are slowly waking up to the reality that China represents one of the largest custom development markets, and they are executing to grab market share there.
“Interest in big data has also spiked; however, confusion around the terms "analytics," "big data" and "BI" have started to disrupt the Chinese market, and we expect this trend will result in slowing BI spending cycles in 2014,” Mr. Yuen said.

Gartner predicts that the industry landscape will evolve considerably in the next three to five years. Some important trends include:

Big Data Use Cases Are Maturing, but Today It's All About Hadoop
Customers across the region are keen to harness the innovative capabilities of Hadoop. Most big data discussions tend to be mired in the technical capabilities of Hadoop, rather than focusing on the business problem or use case at hand. Because not many vendors in the region can offer both the technology and the business analytics capabilities, implementation issues are bound to arise. Most open governments, such as in Australia, promote the publication of great quantities of data in raw format in an effort to use data in meaningful ways for its citizens. This, along with smart city initiatives being promoted by several governments Hadoop; will be an important part of governments' information management strategy.

Mobility and Data Discovery Approaches Enhance Experience of Business Users
In Asia Pacific, mobile BI is being used as an information distribution channel for "road warriors." The use case is simply the mobilization of existing content — from basic reports to elaborate dashboards — targeted at current BI users. By following a different strategy, CIOs can use mobile BI to reach new constituencies, not necessarily those on the go.  By making it fun and easy to use, BI will appeal to nontraditional users — those mainstream users who don't enjoy staring at a grid all day.

The Asia Pacific Market Is Opening Up for Specialist BI and Analytics Vendors
When it comes to advanced analytics, Asia Pacific organizations are willing to examine products from smaller niche companies that offer packaged analytical applications that solve a particular business pain point. This is possibly due to the scarcity of skill sets in the market and the pressure on IT from business folks to deploy BI. As a result, clients are open to buying packaged analytical applications to address specific pain points and niche problems. One clear distinction is that, unlike platform sellers, these vendors predominantly sell to business buyers.

Low-Cost Alternatives
Apart from megavendors and emerging vendors, several low-cost alternatives are available in the market. These vendors saw an uptick in demand mostly from 2007 through 2012 as the megavendors worked on integrating their products. As a result, lower-cost local vendors, such as Yellowfin, TechnologyOne, Open Soft Technology and MAIA Intelligence, built a loyal user base, and they continue to gain market traction.

Additionally, open-source vendors, such as Jaspersoft, Actuate and Pentaho, are improving their products and continue to have mind share among government buyers and high-tech clients, especially product independent software vendors (ISVs).

Gartner Says Annual Smartphone Sales Surpassed Sales of Feature Phones for the First Time in 2013

Smartphones Accounted for 57.6 Percent of Total Sales in Fourth Quarter of 2013
Sales of Android Phones to Approach One Billion in 2014

Kuala Lumpur, February 14, 2014 — Worldwide sales of smartphones to end users totaled 968 million units in 2013, an increase of 42.3 percent from 2012 (see Table 1), according to Gartner, Inc. Sales of smartphones accounted for 53.6 percent of overall mobile phone sales in 2013, and exceeded annual sales of feature phones for the first time.

Table 1
Worldwide Smartphone Sales to End Users by Vendor in 2013 (Thousands of Units)

Company	2013 Units	2013 Market Share (%)	2012 Units	2012 Market Share (%)
Samsung	299,794.9	31.0	205,767.1	30.3
Apple	150,785.9	15.6	130,133.2	19.1
Huawei	46,609.4	4.8	27,168.7	4.0
LG Electronics	46,431.8	4.8	25,814.1	3.8
Lenovo	43,904.5	4.5	21,698.5	3.2
Others	380,249.3	39.3	269,526.6	39.6
Total	967,775.8	100.0	680,108.2	100.0

Smartphone sales grew 36 percent in the fourth quarter of 2013 and accounted for 57.6 percent of overall mobile phone sales in the fourth quarter, up from 44 percent year over year (see Table 2). This increasing contribution of smartphones was led by growth in Latin America, the Middle East and Africa, Asia/Pacific and Eastern Europe, where smartphone sales grew by more than 50 percent in the fourth quarter of 2013. With a 166.8 percent increase in the fourth quarter of 2013, India exhibited the highest smartphone sales growth among the countries tracked by Gartner, and Latin America saw the strongest growth among all regions (96.1 percent) in the fourth quarter. China also contributed significantly to worldwide smartphone sales as sales grew 86.3 percent in 2013.

Table 2
Worldwide Smartphone Sales to End Users by Vendor in 4Q13 (Thousands of Units)

Company	4Q13 Units	4Q13 Market Share (%)	4Q12 Units	4Q12 Market Share (%)
Samsung	83,317.2	29.5	64,496.3	31.1
Apple	50,224.4	17.8	43,457.4	20.9
Huawei	16,057.1	5.7	8,666.4	4.2
Lenovo	12,892.2	4.6	7,904.2	3.8
LG Electronics	12,822.9	4.5	8,038.8	3.9
Others	106,937.9	37.9	75,099.3	36.2
Total	282,251.7	100.0	207,662.4	100.0

In the fourth quarter of 2013, mobile phone sales in mature regions fell due to weaker demand."Mature markets face limited growth potential as the markets are saturated with smartphone sales, leaving little room for growth with declining feature phone market and a longer replacement cycle," said Anshul Gupta, principal research analyst at Gartner.

"Lack of compelling hardware innovation has further exacerbated replacement cycles for high-end smartphones in 2013 because consumers don't find enough reasons to upgrade."

Top Smartphone Vendor Analysis

Samsung: While Samsung's smartphone share was up in 2013 it slightly fell by 1.6 percentage points in the fourth quarter of 2013. This was mainly due to a saturated high-end smartphone market in developed regions. It remains critical for Samsung to continue to build on its technology leadership at the high end. Samsung will also need to build a clearer value proposition around its midrange smartphones, defining simpler user interfaces, pushing the right features as well as seizing the opportunity of bringing innovations to stand out beyond price in this growing segment.

Apple: Strong sales of the iPhone 5s and continued strong demand for the 4s in emerging markets helped Apple see record sales of 50.2 million smartphones in the fourth quarter of 2013.

"However, Apple's share in smartphone declined both in the fourth quarter of 2013 and in 2013, but growth in sales helped to raise share in the overall mobile phone market," said Mr. Gupta. "With Apple adding NTT DOCOMO in Japan for the first time in September 2013 and signing a deal with China Mobile during the quarter, we are already seeing an increased growth in the Japanese market and we should see the impact of the last deal in the first quarter of 2014."

Huawei: Huawei smartphone sales grew 85.3 percent in the fourth quarter of 2013 to maintain the No. 3 spot year over year. Huawei has moved quickly to align its organization to focus on the global market. Huawei's overseas expansion delivered strong results in the fourth quarter of 2013, with growth in the Middle East and Africa, Asia/Pacific, Latin America and Europe.

Lenovo: Lenovo saw smartphone sales in 2013 increase by 102.3 percent and by 63.1 percent in the fourth quarter of 2013. Lenovo's Motorola acquisition from Google will give Lenovo an opportunity to expand within the Americas.

"The acquisition will also provide Lenovo with patent protection and allow it to expand rapidly across the global market," said Mr. Gupta. "We believe this deal is not just about entering into the U.S., but more about stepping out of China."

Gartner expects smartphones to continue to drive overall sales in 2014 and an increasing number of manufacturers will realign their portfolios to focus on the low-cost smartphone sector. Sales of high-end smartphones will slow as increasing sales of low- and mid-price smartphones in high-growth emerging markets will shift the product mix to lower-end devices. This will lead to a decline in average selling price and a slowdown in revenue growth.

In the smartphone OS market, Android's share grew 12 percentage points to reach 78.4 percent in 2013 (see Table 3). The Android platform will continue to benefit from this, with sales of Android phones in 2014 approaching the billion mark.


Table 3
Worldwide Smartphone Sales to End Users by Operating System in 2013 (Thousands of Units)

Operating System	2013  Units	2013 Market Share (%)	2012  Units	2012 Market Share (%)
Android	758,719.9	78.4	451,621.0	66.4
iOS	150,785.9	15.6	130,133.2	19.1
Microsoft	30,842.9	3.2	16,940.7	2.5
BlackBerry	18,605.9	1.9	34,210.3	5.0
Other OS	8,821.2	0.9	47,203.0	6.9
Total	967,775.8	100.0	680,108.2	100.0

Worldwide mobile phone sales to end users totaled 1.8 billion units in 2013, an increase of 3.5 percent from 2012 (see Table 4). Users bought 490.3 mobile phones in the fourth quarter of 2013, an increase of 3.9 percent compared with the same quarter in 2012.

"While the top three mobile manufacturers are dominating the global mobile phone market, their share collectively fell in the fourth quarter of 2013 and yearly as Chinese and regional brands continue to raise their share," said Mr. Gupta.

Table 4
Worldwide Mobile Phone Sales to End Users by Vendor in 2013 (Thousands of Units)

Company	2013 Units	2013 Market Share (%)	2012 Units	2012 Market Share (%)
Samsung	444,444.2	24.6	384,631.2	22.0
Nokia	250,793.1	13.9	333,938.0	19.1
Apple	150,785.9	8.3	130,133.2	7.5
LG Electronics	69,024.5	3.8	58,015.9	3.3
ZTE	59,898.8	3.3	67,344.4	3.9
Huawei	53,295.1	2.9	47,288.3	2.7
TCL Communication	49,531.3	2.7	37,176.6	2.1
Lenovo	45,284.7	2.5	28,151.4	1.6
Sony Mobile Communications	37,595.7	2.1	31,394.2	1.8
Yulong	32,601.4	1.8	18,557.5	1.1
Others	613,710.0	34.0	609,544.9	34.9
Total	1,806,964.7	100.0	1,746,175.6	100.0