Inexpensive Smartphones Will Gain More Substantial Role on the Market – Researchers

Analysts Expect Affordable Smartphones to Expand Market Share

by Anton Shilov
06/26/2010 | 05:13 PM

With over 55 million of smartphones shipped in the first quarter and with 224 million predicted to be shipped in 2010, it is rather clear that the market for smartphones is increasing in general. According to analysts from ABI Research, as the market expands, there will be more and more consumer-oriented smartphones and they will be relatively inexpensive.

 

Much of the fastest growth is being seen in markets previously little penetrated by expensive, cutting-edge smartphones. With new less expensive models becoming available, the global market is becoming much more diverse. An example is provided by Nokia. Its sequential shipments rose in Q1 2010 from 20.8 million to 21.5 million despite the usual quarterly decline, building on an explosive last quarter of 2009 which saw the firm’s smartphone shipments expand 25%, largely on the strength of its new models such as the “C” and “X” lines which are really experience-focused, lower-cost smartphones that directly address those newer markets. Nokia has a history of success in lower-cost feature phone markets, but until recently the company’s smartphone lineup was exclusively high-end.

“These are not ‘iPhone-killers’, they are simpler, lower-end devices, not bleeding-edge top-of-the-line technologies, but they can still deliver satisfying social networking and other basic smartphone experiences,” said ABI’s senior analyst Michael Morgan.

Shipments of Apple iPhone also rose slightly, from 8.7 to 8.8 million sequentially in Q1 2010, partly on the back of strong performance in markets such as Japan and China.

In fact, even now the vast majority of phones sold are 2.5G handsets that are mostly used for conversations and are not suitable for data transfer because of speed limitations by GPRS/EDGE protocols.

“Total shipments of mobile handsets are projected to hit 1.3 billion in 2010, and are forecast to surpass 1.7 billion in 2015. Moving to 3G technologies and beyond, increasing demand for smartphones is a key factor that will drive market expansion over the next five years,” said industry analyst Celia Bo.  

Despite ABI Research forecasts of a 7% drop compared to 2009, 2.5G handsets still hold the lead in the market, set to account for approximately 50% of this year’s total handset shipments. The decline in 2.5G handset shipments is expected to accelerate, taking 2.5G to 25% of the total market by 2015. The 3G handset market is forecast to show an 8% increase compared to last year. Total 3G handsets shipments should surpass 2.5G from 2011 to take the lion’s share in 2015 with 68%.

Even makers of cheap phones in Asia are reshaping their devices and designing them so that to support some of smartphone functionality, a clear indicator that the end-user is looking for something beyond voice-calls.

“While there is considerable fanfare and interest around the latest iPhone and Android phones from Apple, HTC and Motorola, ‘White Box’ or ‘Shanzai’ handset manufacturers are rapidly reshaping the low-cost handset segment as they redefine the ‘look and feel’ of the low-cost/ultra-low-cost segments,” said Jake Saunders, vice president of forecasting at ABI.

These limited-function handsets, along with other low-cost models, will notch up 219 million sales in 2010, according to ABI.