Smartphones to corner 25 per cent of the mobile phone market

Smartphones will corner about 20 per cent of the mobile phone market by 2013 despite the economic downturn, according to a report released Tuesday by multi-media researchers In-Stat.

The report, titled "Smartphones: Heading to the Mainstream," said smartphones will see growth even in 2009 even though the cell phone market is bracing for a rare downturn this year. Happily for manufacturers, the report found that nearly 33 per cent of those surveyed planned to buy a smartphone when they upgrade from their current piece.

 A smartphone is a mobile phone offering advanced capabilities beyond a typical mobile phone, often with PC-like functionality.

"Strong demand is being driven by device manufacturers leveraging open OS device to reinvent the mobile phone experience," said Frank Dickson, VP of In-Stat's mobile Internet group, in a statement. "New and prospective smartphone 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."

The success of Apple's App Store has brought the importance of mobile applications to the forefront for all smartphone manufacturers. Google's Android, Microsoft's Windows Mobile, Nokia, Research In Motion, and Samsung will have over-the-air virtual stores for distributing applications by the end of the year.

Nokia is creating a niche for itself by integrating location and social-networking elements into its application store.

The report also says that Linux OS will see the highest growth in the next few years, and it will eventually have the second-highest volume behind Symbian. Android is expected to provide most of this growth and is expected to appear on the handsets of a number of manufacturers this year, such as Garmin-Asus, HTC, Motorola and Sony Ericsson.

Part of the growth in the smartphone market will be for enterprise use, which is bound to raise issues about security and mobility.

Meanwhile, in a study released Tuesday, the NPD Group, a market research firm said that about 23 per cent of all handset sales in the US during Q4 of 2008 were smartphones. This was up from 12 per cent of all handset sales in Q4 of 2007.

It also pointed out that even as sales of these advanced phones shot up, prices dropped. The average price of a smartphone during the quarter dropped by 23 per cent, from $216 in Q4 of 2007 to $167 during Q4 of 2008, NPD said.

Apple's new iPhone 3G, priced at $199, not only led the sales in smartphones but also took the lead in bringing down prices.

According to market experts, the $200 price range appears to be the sweet spot for consumers in this market with Blackberry Storm, G1 and Palm Pre all falling within this price range.

The NPD report also noted that high-speed data services are becoming important for smartphones as about two-thirds, or 66 per cent, of smartphones sold last year now use 3G wireless networks.

This compares to about 46 per cent of smartphones that used 3G a year ago.