Smartphone market gaining steam

Al Senia
06 Mar 2007

The worldwide smartphone market exceeded 80 million units last year, boosted by sales of 20 million devices just during the fourth quarter, according to research firm IDC. The company reports that 23.5 million "converged devices" were shipped during the fourth quarter of 2006, an increase of 33.5% over the same quarter one year ago. Shipments for the entire year grew by 42% compared to 2005.

That's big news at a time when the global smartphone market is expected to be turned upside down by the introduction later this year of Apple's sleek new iPhone.

According to IDC's research, Nokia remains the undisputed leader in the smartphone market with a 47.2% market share in 4Q '06, down from 52.8% in 4Q '05. For the year, Nokia's market share was just over 50%, far ahead of BlackBerry manufacturer Research-in-Motion's 7.5%, Panasonic's 6.2%, Motorola's 6.1% and NEC's 6.0%. In actual terms, however, the news is positive for most of the manufacturers: IDC reports that overall shipments grew from 56 million in 2005 to 80.5 million in 2006. (Panasonic and NEC, however, saw their 2006 shipments drop below 2005 levels.)

Falling prices, increased functionality and greater selection appear to be behind the worldwide smartphone boom. 'The robust growth in converged device shipments in 2006 was driven by substantially decreased price points and a greater selection of devices for consumers to choose from,' said Ryan Reith, research analyst for IDC's Worldwide Mobile Phone Tracker. 'Competitive pressures have driven price points below $200, making converged mobile devices more affordable to a broader base of users. More than ever before, vendors are focused on providing greater capabilities that differentiate their products while keeping costs in check.'

The growing functionalities of converged mobile devices is another key factor, researchers add. 'It's not uncommon for a converged mobile device these days to pack multiple features inside, including an embedded camera, MP3 player, GPS capability, and an expandable memory card slot,' says Ramon Llamas, IDC research analyst. 'As a result, the converged mobile device, once chiefly associated with enterprise usage, continues to find growth outside of the enterprise with the emerging 'prosumer' market segment.'

Looking to the future. IDC remains upbeat. Lower prices and growing consumer interest should cause sales to continue to grow, although Llamas suggests that it is important "to watch which vendors are taking which strategic steps in which regions in order to realize market share and profitability."

Although Nokia far outpaced its rivals (and scored a major worldwide hit with its multimedia-laden N-series), IDC researchers say the vendor acknowledges that its performance both in the enterprise and among users in the Americas has been below expectations. To reverse this, Nokia recently announced several new E-series devices and targeted the new N75 specifically to the Americas .

(Al Senia is editor of America 's and a senior writer with Telecom Asia.)

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