When early this year PC makers like Asus and
Acer of Taiwan and Dell of the US announced their intention to
diversify into Smartphones manufacturing, people in the know-how of the
industry were bewildered by such ideas. Their reaction was not totally
unwarranted though. Smartphones (also referred to as converged mobile
devices), like PCs, are fiercely contested markets, with Nokia leading the pack,
followed by Research in Motion (RIM) of Canada, and Apple (iPhone)
dominating the global markets for these smart devices. With Acer launching a slew
of Smartphones in the global markets and Dell said to be fast on track
to launch its own handset, the competition is only bound to intensify: the
ubiquitous Internet warrior Google is already there, and rumors about Cisco,
the router maker, getting into Smartphones arena is getting
louder. Halfway into 2009, it is no longer a secret why everyone wants to grab a
slice of the Smartphones pie which remains the only bright spot for the global
handset makers who witnessed the basic and lower-end mobile segments
register its biggest quarter-on-quarter contraction since 2001, according
to Gartner. The latest data from the research firm shows that the
worldwide mobile phone sales dropped 8.6% y-o-y to 269.1 million units in the first
quarter of 2009. In contrast, Smartphones sales grew 12.7% to touch 36.4
million units, during the same period, driven primarily by touch-screen
handsets; half of all the Smartphones on the market are now sold with touch-screens.
Besides, falling handset prices too have helped improve their market
penetration. For instance, in the US, Smartphones accounted for 23% of
all handsets sold in the fourth quarter, almost the double of 12% in Q4 2007,
according to the research firm, NPD. Falling handset prices (Apple
recently halved the price of its entry-level
iPhone to $99 in a bid to widen its reach
amidst rising competition from rivals, notably Palm Pre; Nokia too has resorted
to price cuts along with launching cheaper multimedia-enabled phones),
improved browsing experience, and reduced data plan charges have
further helped push the penetration of these high-end devices. According to NPD,
the average price for Smartphones fell 23% from $216 in Q4 2007 to $167 last
year. Worldwide, Smartphones now represent 13.5% of all mobile device sales,
up from 11% in the first quarter of 2008. And going by the forecasts of
research firms, Smartphones have only one way to go—up—recession or no recession.
While handset manufacturers focus on offering improved user interfaces
and services to differentiate themselves, operators' thrust on offering
increased web-related services in order to push their own sales too is helping prop
up demand for new, feature-rich Smartphones. According to
Harry Wang, Director, Health and Mobile Product Research, Parks
Associates, "The success of the iPhone, Pre,
and Blackberry shows the strength of consumer demand for an intelligent,
multifunctional device." According to Gartner, positive performance by
Research In Motion (RIM) and Apple defined that services and applications
are now instrumental to Smartphones' success. In the US, where such phones
have registered strongest growth, the demand has primarily been driven
by greater competition for mobile applications that add capabilities, suggests
a survey finding by In-Stat. The report says that potential buyers are drawn
to new mobile applications, even though the median number of
applications downloaded for all platforms,
including the Apple iPhone, is relatively modest—below five applications per
user for each platform. "People have simply gotten more committed to the web
as information resources, and because of that they're uncomfortable when
they can't access it," observes Tom Nolle, President, CIMI Corporation.
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