Smartphone boom defies wider handset slump

The past year has seen a 27 percent increase in smartphone sales — while the term 'smartphone' will soon become meaningless, according to analyst Gartner

Global smartphone sales increased by 27 percent in the second quarter, compared with the same period last year, according to Gartner.

The boom in the smartphone segment — from 32 million to 41 million units — was not matched by the wider mobile-phone market, the analyst firm said in its Competitive Landscape: Mobile Devices, Worldwide, 2Q09 report, released on Wednesday. Overall, handset sales fell by six percent year-on-year, from 305 million to 286 million units.

The rise in smartphones despite a drop overall is partly because mid-range handsets are becoming less popular, according to the report's author, Carolina Milanesi. Instead of buying mid-range phones, people are choosing to scale back to cheaper, low-end devices, or are opting for feature-rich smartphones, she said.

"The parts that are selling right now are the ultra-low-end or the smartphone segments," Milanesi told ZDNet UK.

Milanesi noted that many more smartphone models are available now than were on the market a year ago. In addition, mobile operators are "keen on customers moving to smartphones, because they tend to come with more expensive data plans", she said, and therefore providers are subsidising such devices more.

She added that the average selling prices of smartphones had "come down quite dramatically" over the last year.

"We're going to get to a point in 2012 where 45 percent of [handset] sales in Europe will be smartphones, and the term itself will become meaningless," Milanesi said. "Pretty much all devices will move to an open operating system."

According to Gartner's figures, Nokia leads with 45 percent of the global smartphone market, slightly down from its 47.4 percent share a year ago. RIM is in the number two spot with an 18.7 percent share, and Apple is in third place with a 13.3 percent share.

Despite its continuing dominance in the smartphone market, Nokia needs to produce a new, iconic high-end device in order to maintain its position, Milanesi suggested. She noted that the N97, which was supposed to be Nokia's new flagship model, had sold only 500,000 units since its launch in June. Apple's iPhone 3GS, by way of contrast, sold a million units in its first weekend of availability.

"Sales of the N97 have been disappointing so far," Milanesi said. "We'd been waiting for this device since December last year, and it was supposed to be Nokia's pride and joy, but it has not seen the anticipation and excitement that the iPhone has seen. Nokia is in desperate need of a device that did what the N95 did for them, in terms of iconic devices."


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