PC vendors want slice of smartphone pie

Converging mobile PCs and smartphone capabilities push vendors toward lucrative smartphone market, but barriers to diminish impact, says Gartner.

With the global PC market continuing to shrink, vendors are looking to the booming smartphone market to shore up their bottom line, according to a new report by Gartner, which expects all major PC vendors to announce their entrance into the market by end-2009.

Released Tuesday, the report projected that worldwide smartphone sales will grow by 29 percent year-over-year to hit 180 million units in 2009. This figure surpasses the number of notebooks predicted to be sold by the end of the year. In addition, smartphones revenue is expected to reach US$191 million by 2012, some US$39 million more than what consumers are anticipated to spend on mobile PCs in the same year.

According to the research firm, smartphones currently account for 14 percent of all mobile device sales, and this number will rise to around 37 percent of handsets sold worldwide by 2012.

This booming sector, in contrast to the slump in PC sales, will push computer makers toward the promising smartphone market. In fact, Gartner said all major PC vendors will unveil plans to establish some presence in the smartphone market by the end of 2009.

As mobile PCs and smartphone capabilities converge, and the market opportunity smartphones present increases, most PC players "feel they cannot afford to ignore" this potential, Roberta Cozza, Gartner's principal research analyst, said in the report. However, they will face tough challenges, she said.

Challenging barriers-to-entry
According to Gartner, PC vendors' cumulative share of the smartphone market, excluding Apple, has remained stagnant at less than 1 percent for many years. Even with plans to increase their presence in this market, Cozza said no single PC player will be able to secure over 2 percent market share in the next three years.

"PC vendors will be challenged to stand out from the crowd and be successful, unless they produce truly differentiated and unique products," she explained. "This will limit any PC vendor presence in the smartphone market to low single-digits for some time."

PC vendors will face numerous challenges in their bid to make their presence felt, the analyst said, noting that both the notebook and smartphone markets were "governed by different rules".

Gartner highlighted five key challenges PC vendors will face entering the smartphone market:

  • Smartphones are not "cut-down" versions of mobile PCs; technical specifications are less important.
  • Mobile operators control much of the distribution for mobile phones.
  • Brand and user experience are two significant differentiators for mobile handsets.
  • With better understanding of Internet usage behavior, handset vendors continue to have the upper hand in the mobile Internet devices (MIDs) market.
  • With consumer smartphones readily available, it is no longer IT managers who determine the influx of such devices into businesses.

PC vendors also traditionally offer smartphones running Microsoft's Windows Mobile platform, which attract mainly business users, according to Gartner. The challenge is then to adapt their products with a more consumer-oriented approach, which is dictated by short life cycles, aesthetically pleasing designs and hardware and software platform diversity.

Different usage patterns will also require PC vendors to establish a thorough understanding of consumer behavior, the report noted.

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