Software that helps transform feature phones into smarter devices will see increased demand as feature phone makers such as Nokia battle against smartphone manufacturers to corner the low-cost smartphone market.
Stijn Schuermans, business analyst at market analysis firm VisionMobile, pointed out that the main characteristic separating feature, or "dumb", phones from smartphones was apps. The former are voice-centric devices that are "ill-suited" for running apps while the latter are devices designed to run apps, he said.
With these apps, users are exposed to a whole new set of possibilities, particularly in areas such as entertainment and productivity, and devices become more valuable with more use cases, Schuermans noted, adding that this was a "winning formula" as dumb phone sales were slowing while smartphones were accelerating.
He went on to say that companies that have strong positions in feature phones, such as Nokia, understood this trend and their goal was to "reinvent the low-cost smartphone" by trying to make dumb phones better suited to run apps.
"For that, they need operating systems, tools for developing apps and an ecosystem of developers," the VisionMobile analyst stated.
As such, the demand for companies developing software to make feature phones more like smartphones will continue to grow as handset vendors and operators from both the top- and bottom-end of the mobile market look to expand into the low-cost smartphone segment, said Adam Leach, principal analyst at Ovum.
He told ZDNet Asia that with smartphones going down the same route as PCs--in that high-end devices would expand into the mid-tier market through Moore's Law and software optimization over time--handset makers and operators would be keen to speed up this process.
After all, the low-cost smartphone market is a substantial segment for handset vendors to target, the Ovum analyst noted. He said global mobile shipment figures reached 1.54 billion in 2011, with about 450 million to 490 million of these devices high-end smartphones. The remaining 1 billion devices can be roughly divided into 500 million for feature phones and about 500 million of low-cost smartphones, Leach stated.
It is in the feature phones market that companies such as Smarterphone, which developed an operating system to run smarter apps on feature phones, come into play, he noted. Nokia bought the small Norwegian company in January for an undisclosed sum, according to ZDNet Asia's sister site CNET.
Schuermans concurred, saying: "We think that Nokia's acquisition of Smarterphone is an attempt to reinvent the feature phone and evolve their S40 platform toward a low-cost smartphone using technologies that it can control."
Another such company is InputDynamics, and its CEO, Giovanni Bisutti, described its TouchTap software as making mobile handsets smarter by adding soft-key buttons anywhere on the casework without the need for new hardware.
He also said the feature phones market was still an "important battleground" for tier 1 and tier 2 handset makers and there was a "rosy future" for companies like itself that aimed to improve the user experience for devices in that market segment.
Schuermans, however, does not believe these third-party software vendors will be able to exist independently. He pointed to the acquisition of Smarterphone as a sign that these companies only have a future as part of larger organizations such as handset makers or cellular chipset vendors.
"Success in this business requires significant scale and resources need to build and maintain app developer ecosystems," he noted, adding that many of these third-party companies do not have these resources readily available to them.