Smart-phone sales are trumping the economic meltdown

5 Mar 2009

Across the world, the mobile market is in decline, except for the smart-phone segment, which could see growth as high as 11.1pc this year.

Figures just in from iSuppli suggest global shipments of 192.3 million units, up 11.1pc from the 173.6 million devices shipped in 2008.

A more pessimistic outlook scenario calls for growth of only 6pc this year, reaching 183.9 million units.

“For the optimistic scenario to come to fruition, wireless network operators must cut fees for data services and offer aggressive subsidies to reduce consumer smart-phone prices,”

said Tina Teng, senior analyst for wireless communications for iSuppli.

“Furthermore, wireless operators and handset brands have to sell consumers on the value of smart phones to encourage customers to upgrade.

“However, if consumer confidence continues to erode, iSuppli’s pessimistic forecast is likely to prevail,” Teng warned.

According to the optimistic scenario, smart phones will represent 17.4pc of total mobile handset unit shipments in 2009. If the pessimistic scenario holds sway, smart phones will account for only 16.6pc of total mobile handset shipments this year.

The optimistic scenario foresees a unit shipment compound annual growth rate (CAGR) of 21pc from 2008 to 2013, while the pessimistic view predicts an 18.3pc growth rate.

“With 3G networks having become prevalent all over the world, smart phones are no longer just for corporate users – they are for consumers too,” Teng said.

“Consumers increasingly are demanding data-intensive applications that require the kinds of high data speeds supported by 3G networks,” she added.

With the rise of the smart phone market, battle lines are forming around operating systems used in these devices.

“The endorsement of certain operating systems (OSes) by various operators and handset brands is giving open OSes a push. With the power and influence of the operators in the wireless supply chain, their support is putting high-level OSes under the spotlight.”

High-level operating systems for smart phones include Microsoft Corp’s Windows Mobile, Symbian Foundation’s OS, Research in Motion’s RIM OS, Apple Inc’s Mac X OS, the Google/Open Handset Appliance’s Android, Palm’s OS and other Linux-based operating systems.

High-level mobile OSes have emerged as critical components of service providers’ handset strategies. The OS ecosystem and the direction of each application developer community determine the availability of applications for network providers and subscribers. Because the OS is transparent to the end user in most cases, such applications are essential to attracting consumer interest.

“Beyond the friendliness of user interfaces, the availability of a variety of applications is the key factor attracting consumer interest to smart-phone products,” Teng said.

“Thus, different players at various segments of the supply-chain are starting to build mini-ecosystems, including applications, in order to attract consumers and gain their loyalty. Microsoft’s launch of MyPhone, Nokia’s Ovi and the Android Marketplace all represent different approaches to building such an ecosystem.”

By John Kennedy

Pictured: RIM’s BlackBerry Bold