In a market that is moving away from higher end product and now turning its attention to emerging markets around the globe, the smartphone category is at a bit of a crossroads as product innovation here is becoming less about hardware bells and whistles and more about how sensor tech in the device will interact with other devices as we move into the Internet of Things (IoT) era.

According to a recent Frost & Sullivan report on the smartphone market, the keys to success for manufacturers as this category matures will be all about differentiation and less about features. The report also mentions that design specs will be important as will brand loyalty moving forward. As some of the smaller smartphone companies, like HTC, Huawei and ZTE continue to make inroads with unique design specs and lower-end price points, the pressure will be on the larger smartphone makers to ward off their challenges - particularly in emerging  markets.

With regard to the IoT factor, the report adds, "The proliferation of internet-enabled devices will offer vast hardware opportunities for Samsung, especially with its expertise manufacturing hardware such as refrigerators, washing machines, and TVs. Samsung already has the largest portfolio of hardware, and it has a huge opportunity to connect these and really add value for the customer."

Apple's smartphone future is a bit less clear as that hardware portfolio isn't quite as robust as Samsung's. The fact Apple isn't in the business of making lower-end, lower cost products will also be an interesting obstacle for the company as well.

Several research firms are predicting a sustained decline in the worldwide average selling price of smartphones and that this dip will drive future growth. BI Intelligence estimates the global smartphone average selling price will dip 10% in this year to about $250 per unit, and will ultimately fall to about $165 by 2018.

The IB Intelligence report added that as the battle for smartphone market share moves to these emerging markets, the way smartphones are manufactured and marketed will fundamentally change. Price will continue to become a critical selling point, while innovation, they cite, could slow down significantly.

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