Mobility

December 18, 2006
Smartphone sales rising fast

UNITED STATES -- Smartphone unit sales almost tripled from 2004 to 2005, and increased by 50 percent in the first half of 2006 over 2005, reported In-Stat. The stakes are high; as well as the escalating battle for smartphone operating system dominance, the growing acceptance of smartphones offers new competition to established products such as BlackBerry, Personal Information Managers and PDAs.

Bill Hughes, an analyst at the high-tech market research firm, said: "There are two reasons for caution, in spite of spectacular sales. Many smartphone users continue to carry the very devices that smartphones are meant to replace. Also, users have been slow to add new applications to their devices. Most users have only downloaded a few applications."

The research also found that business users that received their smartphone through work are three times more likely to carry a second wireless phone for personal calls than other users. According to the report, many smartphones sold in 2006 serve as a combination phone and PDA. Others have power and performance comparable in capability to many laptops. Most of the smartphones sold globally, however, only enable the user to access the capabilities of basic wireless phones. However, in the US, smartphone customers are about evenly split between Windows Mobile, BlackBerry OS, and Palm OS.

Convergence Plus spoke with Victor Liu Zhoujiao, industry analyst, In-Stat, to find out the reasons behind users’ preferences for feature-rich phones. Excerpts.

Convergence Plus: What is the distinction between PDAs and smart phones?

Victor Liu Zhoujiao: Smartphones, whether its PDA-like or phone-like form-factor, have the antenna and component to connect to cellular network, so to make voice calls and data transmissions over the operators cellular network. PDA normally only have Wi-Fi connectivity, so are only able to work with WLAN found at homes or offices.

CP: Which vendor, according to your research, is the worldwide market leader across both device categories?

VLZ: As regards to PDAs, Dell, HP, many other smaller players from Taiwan and China offer latest and innovative products, whereas for smartphones, Nokia, HTC (Taiwan), Palm, Motorola, RIM (Canada) dominate the market worldwide.

CP: What will be the expected number of phones shipped in Asia by the end of this year?

VLZ: According to published reports, total phones that are expected to be shipped in Asia by the end of this year are nearly 338.1 million units. Out of this, nearly 18.8 million units would be smartphones.

CP: What is the average revenue per device that a vendor gets?

VLZ: Though the revenue varies from model to model, and vendor to vendor, but broadly speaking, ona n average, it would be between US $200 and US $900.

CP: What are the current maket trends for the adoption of smartphones, in Asia and globally?

VLZ: In Asia, the market is moving toward mass adoption as more models are readily available for selection. Glabally, nearly one-third of the total market size in North America, Europe, and Asia, is looking up for smartphones.

CP: What challenges are being faced by the industry to increase the market penetration of smartphones?

VLZ: As the market enters mass adoption, customers are looking for varieties, so to match their desire and demand, vendors have to follow up, shifting some focus from functionality to design and fashion factors as well. On the other hand, the eco-system has to work out as much as applications as possible to foster the growth of the business as a whole.

CP: How effective will these devices be to fuel the replacement market in Asia?

VLZ: When people buying their second or third phones in life, they naturally looking for more advanced devices. Smartphone is one of the choices, giving the fact that it is priced within the budget range of that particular customer. Also, when there are more smartphones in the market: ranging from very advanced expensive models to mid range affordable ones, the market is likely to grow rapidly in next couple of years.