Analysys Mason predicts that there will be 3.9 billion smartphone connections worldwide in 2018, a growth of 136% over the next five years.
However, non-smartphones will still account for the majority of handset connections worldwide for the next four years and smartphones' share of connections will reach only 52% in 2018.
The gap between mature and developing markets will widen, as some countries approach saturation, while in others the smartphone market is only nascent.
Ronan de Renesse, Principal Analyst, said: "2014 will be a pivotal year for vendors as the high-end smartphone market reaches saturation in developed countries. 76%, 82% and 88% of handset connections will be smartphones in Western Europe, North America and Developed Asia-Pacific in 2018.
"Smartphone unit sales will decline as early 2015 in some countries, such as the Nordics in Europe and the USA, as smartphone replacements fail to compensate for the lack of non-smartphone-to-smartphone conversions. It will therefore be critical for smartphone vendors and operators to shorten replacement cycles further and retain existing customers. Stakeholders will also need to look at new areas of growth such as low-end smartphone segments and wearables."
Ronan de Renesse noted that launch of Apple's iPhone 6 will not stop iOS from losing market share. iOS will correspond to 13% of smartphone unit sales in 2018, down from 16% in 2013. Android will maintain its comfortable lead with a 72% share of unit sales in 2018. The level of native software customisation and the size of the ecosystem are significant drivers for Android's adoption compared with competing operating systems. Windows Phone will continue to grow its market share, particularly in the high-end segment, but will remain below the 10% mark. Other OSes such as Firefox OS, Tizen and Ubuntu have yet to prove their ability to disrupt the market and will take a long time gain market share; they will only correspond to 5% of smartphone unit sales in 2018.
Ronan de Renesse added: "Chinese smartphone manufacturers are well positioned to dominate the worldwide market. 1.3 billion smartphones will be sold in China in the next 5 years. Assuming an average selling price of USD50-100, the Chinese smartphone market will generate between USD65 billion and USD130 billion in that period. China's smartphone vendors like Coolpad, Meizu, Oppo and Xiaomi will use this revenue to drive international expansion.
"The pole position for the smartphone market in terms of operating systems and device manufacturers will not change much in the next five years. However, like a tugging war, much strength will be required from the major stakeholders to maintain their position and capture whatever little market share they can. The low-end smartphone segment will be paramount in maximising smartphone adoption across the world. The user experience on low-end smartphones is as important if not more than on the latest iPhone or Samsung Galaxy S."