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Smartphone sales to cross 1B by 2016

Posted: 01 Aug 2011 ?? ?Print Version ?Bookmark and Share

Keywords:smartphone? handset market? mobile phone?

IMS Research has forecasted that smartphone sales will eclipse 420 million devices in 2011 and will make up about 28 percent of the global handset market. Annual sales are also expected to top one billion devices by the end of 2016 due to the release of more affordable entry-level smartphones, accounting for one of every two mobile handsets sold.

"But despite the higher margins for smartphones, and the seemingly insatiable consumer appetite for converged devices, it is clear that not all OEMs are equally positioned to capitalize on this market trend," said Josh Builta, analyst in IMS' mobile technologies group. "For instance, LG, despite being the third largest OEM in the world, has offered a fairly limited smartphone portfolio in recent years, a factor that resulted in the company reaching less than a three percent share of the total smartphone market in 2010."

Smartphone market share estimates

At the same time, Nokia saw its portion of smartphone market decline so dramatically that in early 2011 the company dropped the Symbian platform in favor of Microsoft's Windows Phone OS. In 2Q11, Nokia reported smartphone sales fell to 16.7 million, down 34 percent from the same period in 2010.

"Clearly one of the key dynamics of the mobile handset competitive environment in recent years has been the inability of many traditional market leaders to recognize and adjust to the growing smartphone tier," added Builta. "The reasons for these failures vary and include everything from poorly designed and manufactured devices, unsatisfactory user interfaces and portfolios that don't offer products with a differentiating feature. These lapses have created opportunities for newer entrants to the market that they have aggressively pursued."

In recent years, no company has flourished in this environment as much as Apple. The company's 2Q11 results in which it reported record sales of more than 20 million iPhones indicates it can be expected to remain an influential presence in the market despite the increased competition.

However, Apple is not alone in its success. Of the traditional handset manufacturers, Samsung has demonstrated the best results in recent years. Capitalizing on its diverse portfolio that includes devices using the company's own bada operating system along with Android and Windows Mobile as well as its Galaxy series, Samsung smartphone market share increased from about three percent in 1Q10 to over 13 percent in 1Q11. Smaller, dedicated smartphone vendors such as HTC have also seen their position rise.

"These companies are well positioned to benefit from the projected growth of the smartphone market in the future. Though the other OEMs are stepping up their efforts in the space, companies such as Apple, HTC and Samsung have a considerable amount of momentum. Catching them will not be an easy task," Builta noted.

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