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Smartphones Shine In Otherwise Dim Handset Market

The opportunity for higher growth exists because carriers' high-speed 3G networks have taken smartphones beyond businesses to the mainstream market.
Global smartphone shipments could prove to be a bright spot in an otherwise lackluster handset market this year, a market research firm said Wednesday.

Shipments of the advanced mobile phones could be as much as 11.1% higher than last year, reaching 192.3 million units, if wireless service providers cut fees for data services and offer higher subsidies to reduce consumer smartphone prices, iSuppli said. If none of that happens, then growth is likely to reach only 6%, or 183.9 million units.

"Wireless operators and handset brands have to sell consumers on the value of smartphones to encourage customers to upgrade," iSuppli analyst Tina Teng said in a statement.

ISuppli's optimistic scenario has smartphones representing 17.4% of total handset shipments this year. If the more pessimistic scenario wins, the smartphones will account for 16.6% of the market.

Furthermore, if data service and hardware prices are lowered, iSuppli foresees a unit shipment compound annual growth rate of 21% from 2008 to 2013. If not, than the CAGR will be 18.3%.

The opportunity for higher growth exists because carriers' high-speed 3G networks have taken smartphones beyond businesses to the mainstream market. "Consumers increasingly are demanding data-intensive applications that require the kinds of high data speeds supported by 3G networks," Teng said.

Besides the availability of better networks, third-party applications that make smartphones more useful are becoming a key attraction for consumers, iSuppli said. Network operators working with device manufacturers can use this software, as well as the underlying operation system, to build a differentiating user experience and retain subscribers.

To do this, however, carriers eventually will have to share service revenue with content providers and application developers or include them as partners in business development, iSuppli said.

ISuppli is the latest market researcher to predict solid growth in the smartphone market. In-Stat on Tuesday said the devices will grab 20% of the mobile phone market by 2013, and predicted growth this year, despite a rare downturn predicted for the overall market as a result of the struggling economy.


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