Good times ahead for smartphone vendors

High end mobile handsets and smartphones are expected to account for a growing proportion of devices sold each year, potentially sustaining the performance of brands such as Nokia at a time of economic uncertainty.

It’s been widely reported that global mobile phone shipments during the fourth quarter of 2008 fell 10 per cent year over year, to reach 295 million units, marking the industry’s slowest growth rate since 2001. But some industry watchers believe smartphones could be a saving grace for handset vendors.

Analyst Juniper Research forecasts that, between 2008 and 2013, annual sales of smartphones will rise by 95 per cent to over 300 million.

Underpinning Juniper’s prediction is the belief that a rising demand for complex Web 2.0-centric applications is broadening user appeal and expanding the overall market for ‘smart’ devices. This key trend is not being lost on handset manufacturers, large and small alike, as they increasingly rely on sales of high end devices to mass market users, with smartphones increasingly becoming the basis for the next generation of mobile devices.

According to Juniper analyst Andrew Kitson: “The process of evolving mobile phones into internet-centric, highly personalised mobile computers is well underway. Changes in the design and form of mobile devices, such as the inclusion of large touch-based displays, have been taken to their limits. Looking ahead, the shape and form of next-generation devices will most likely be led by software and content, rather than hardware, as vendors such as Nokia strive to make their devices highly personalised and rooted firmly in the online environment. ”

The company predicts that by 2013, around 23 per cent of all new mobile phones will be smartphones, up from 13 per cent in 2008, while overall mobile device shipments, which grew by a nominal 5-6 per cent at best in 2008, are projecting to decline by up to 10 per cent or more in 2009.

“As margins on handsets fall, vendors like Nokia and Sony Ericsson are increasingly diversifying into the service provision arena as a means of bolstering earnings – solutions such as music libraries and location based social networking present significant opportunities in the future,” said Juniper.