Smartphone growth lies in low-end phones

SAN JOSE, Calif. – Low-end and emerging markets are the next fertile fields for growth in smartphones, and Symbian and Android are the best positioned platforms to harvest them. That was the view of analysts at ABI Research who project sales of smartphones could double from about 200 million this year to 400 million in 2014.

"The high-end handsets are creating the buzz, but how fast these things can move downstream will determine the next big bump in growth," said Kevin Burden, practice director for mobile devices at ABI. "We will get to the point where every phone becomes a smartphone, but it will be a slow march," he said in a Webinar Thursday (August 4).

According to ABI, smartphones will rise from being 15 percent of all handsets in the first quarter of 2009 to 19 percent in the last quarter of this year. By 2015 they could represent more than 30 percent of all cellphone sales.

Nokia is well positioned for the next round of growth, Burden said. It leads the smartphone market with sales of about 45 million handsets in the first half of 2010, twice its nearest competitor. The Finish giant which sold a total of 111 million cellphones 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 marketshare, 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 22.8 million handsets in the first three months of 2010 to 25.8 million 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 5.5 million to 11.3 million units, matching second place Research in Motion, ABI said.

Apple declined slightly from 8.8 million to 8.4 million 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.