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Entry-level smart phones era to start

Posted: 10 Aug 2010     Print Version  Bookmark and Share

Keywords:smart phone segment  entry-level smart phones  cellular market 

In the coming years, the entry-level smart phones will hold the key to smart phone market's growth, according to ABI Research. The firm projects smart phone penetration to rise from 20 crore units this year to 40 crore units in four years. So even though high-end smart phones hog the publicity, the market will owe its growth to the entry-level smart phone segment.

The firm's market research indicates that by 2015, the smart phone category will account for more than 30 per cent of the mobile handset market. In early 2009, the category only held 15 per cent.

Nokia is well positioned for the next round of growth, Burden said. It leads the smart phone market with sales of about 4.50 crore handsets in the first half of 2010, twice its nearest competitor. The Finish giant which sold a total of 11.10 crore cell phones in the second quarter can also leverage volume channels developed for its lower-end feature phones and handsets, he said.

Although Apple iPhones and Android handsets command much of the mindshare, Nokia still has the actual market share, Burden said. "Ignoring them would be a big mistake because they are often the first to market with new technologies," he said.

The Symbian mobile operating system, co-developed by Nokia and now made open source, jumped from use in 2.28 crore handsets in the first three months of 2010 to 2.58 crore in the second quarter. ABI attributed the growth to lower ASPs on the handsets.

But the big winner in the last quarter was the Android platform which saw sales rise from 55 lakh to 1.13 crore units, matching second place Research in Motion, ABI said.

Apple declined slightly from 88 lakh to 84 lakh handsets sold in the quarter, in part due to the shift to its iOS 4. Apple's sales are expected to surge again now that the transition is over with the release of the iPhone 4.

"Antennagate did not slow down iOS4 at all," said ABI senior analyst Michael Morgan. "It almost seems they can do no wrong, even if they do wrong," he said.

Apple has a significant opportunity capturing new business users. However its limited distribution model and focus on high-margin products could shut the company out of the next big round of growth in low-end and emerging markets, Morgan said.

ABI declined to share forecasts of growth by software platform, in part because many wild cards are in the deck. One of the biggest ones, Microsoft's Windows Mobile 7, is expected to be released late this year, supported by new handsets from HTC.

Burden said he still has concerns about how well Microsoft's panel-based user interface will scale for users that have large contact lists. "It could get confusing, and Microsoft as big as it is will have a hard time keeping up with the pace of releases of the open source community," he said.

For its part, HTC was been riding the wave of Android growth to date, leaping from sales of 33 lakh to 54 lakh smartphones in the latest quarter. However the company's focus on high-end handsets may also prevent it from capturing the new growth at the low end, Morgan said.

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