27 July 2011

Smart-phone sales to top 420 million in 2011, taking 28% of handset market 

Sales of smart-phones will exceed 420 million devices in 2011, accounting for nearly 28% of the entire global handset market, according to market analyst firm IMS Research. With the introduction of more affordable 'entry-level' smart-phones, IMS predicts that annual sales will surpass 1 billion devices by the end of 2016, accounting for half of all mobile handsets sold.

“But, despite the higher margins for smart-phones, and the seemingly insatiable consumer appetite for converged devices, it is clear that not all OEMs are equally positioned to capitalize on this market trend,” says Josh Builta, analyst in IMS’ Mobile Technologies Group. “For instance, LG, despite being the third largest OEM in the world, has offered a fairly limited smart-phone portfolio in recent years, a factor that resulted in the company reaching less than a 3% share of the total smart-phone market in 2010,” he adds. At the same time, Nokia saw its share of the smart-phone market decline so dramatically that in early 2011 it dropped the Symbian platform in favor of Microsoft’s Windows Phone OS. In Q2/2011, Nokia reported that its smart-phone sales were down 34% year-on-year to 16.7 million.

“Clearly, one of the key dynamics of the mobile handset competitive environment in recent years has been the inability of many traditional market leaders to recognize and adjust to the growing smart-phone tier,” says Builta. “The reasons for these failures vary and include everything from poorly designed and manufactured devices, unsatisfactory user interfaces, and portfolios that don’t offer products with a differentiating feature,” he adds. “These lapses have created opportunities for newer entrants to the market, which they have aggressively pursued.”

In recent years, no company has flourished in this environment as much as Apple. In Q2/2011, Apple reported record sales of more than 20 million iPhones, indicating that it can be expected to remain an influential presence in the market despite the increased competition.

However, Apple is not alone in its success. Of the traditional handset makers, Samsung has demonstrated the best results in recent years. Capitalizing on its diverse portfolio — which includes devices using the firm’s own bada operating system along with Android and Windows Mobile — as well as its highly popular Galaxy series, Samsung's share of the smart-phone market increased from about 3% in Q1/2010 to more than 13% in Q1/2011. At the same time, smaller, dedicated smartphone vendors such as HTC have seen their position rise dramatically, says IMS.

“These companies are well positioned to benefit from the projected growth of the smart-phone market in the future,” reckons Builta. “Though the other OEMs are stepping up their efforts in the space, companies such as Apple, HTC and Samsung have a considerable amount of momentum. Catching them will not be an easy task,” he believes.

See related items:

Smartphones to rise from 27% to 53% of handset sell-through in 2015

Smartphone sales grow 66% in 2010

Tags: Smart phones Smartphone market Apple Samsung Nokia

Visit: http://imsresearch.com