Analyst: 'Classic' feature phone will survive

More phone makers pushing into smartphone segment may edge out feature phones eventually, but "classic" form factor will persist, says Strand Consult CEO.
Written by Victoria Ho, Contributor on

The "classic" feature phone form factor will persist, in spite of dominant feature phone maker Nokia's decision to focus on the smartphone segment, according to an analyst.

Facing pressure in the smartphone arena from the likes of Apple and Research in Motion, the Finnish phone giant announced last month plans to consolidate its handset lineup and focus on smartphones. Nokia is the veritable king of the low-end phone segment, and has over the last few years relied on emerging market sales to boost its overall handset share .

John Strand, CEO of Strand Consult, thinks Nokia's shifting focus on the smartphone segment is indicative of the trend that lines have blurred between smartphones and feature phones.

In an e-mail interview with ZDNet Asia, Strand said one example of blurring the lines is phone makers moving their smartphone OSes onto their mid-range handsets. In Nokia's case, it is placing its high-end Series 60 Symbian platform onto mid-ranged Series 40 devices, while it revamps its high-end range with Maemo, he said. The move, he pointed out, merely represented a "technology shift" or the increasing capability of mobile phones, and not an attempt to abolish low-end phones.

Strand added that manufacturers are also expected to churn out an increasing number of smartphones, due to the falling cost of producing these devices. However, he noted that the upward trend in smartphone production has been largely due to cost efficiencies in technology, not because consumers are specifically demanding smartphone devices.

According to him, "only a few customers deliberately purchase smartphones" while most want a "reasonably-priced" phone that is capable of several "smart" features. Whether a customer ends up with a smartphone or a feature phone was a matter of "coincidence", he added.

As a result, the "classic" feature phone will survive, as there exist consumers who prefer that form factor.

Strand Consult estimates that entry-level devices make up the bulk, or 45 percent, of Nokia's sales. Its mid-range Series 40 devices account for 40 percent of total units shipped, while smartphones contribute the remaining 15 percent.

Nokia, in contrast, told ZDNet Asia that it expects the smartphone market to grow faster from next year, and eventually overshadow feature phones. In response to an e-mail query from ZDNet Asia, a Nokia spokesperson said the company intends to take its smartphones to the mass market at lower price points.

"We expect that in 2010, volume for the overall mobile device market will increase about 10 percent year over year," she said. " And we expect the smartphone segment will grow much faster."

And while feature phones may survive, they could eventually be eclipsed by smartphones, the spokesperson indicated. "People can do more with smartphones which offer advanced capabilities and PC-like functionality, and this is definitely more attractive to consumers compared to feature phones.

"As we drive our smartphones into new markets [at] more accessible price points to [present greater value to customers], we would be able to see it [become] the choice phone form factor."

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