Smartphone Consumer Demand Growing

Despite the economic downturn, consumers' thirst for sophisticated devices and features continues to grow, and so does the market serving it, according to new research by Frost & Sullivan.

Features like touchscreen functionality, Wi-Fi, and location-based services remain in demand, and the firm said that software will continue to play a significant role in the mobile handset market in the next two years. In order to further bolster the appeal of advanced handsets, synergies will likely develop between mobile operators and internet companies, the media, and the entertainment industry, Frost & Sullivan predicts.

At the end of 2008, 147.8 million smartphones had shipped in North America, Europe, Asia Pacific, and Latin America, according to the analysis from the Frost & Sullivan report, "The Race of Smartphones, What Next? Impetus in OS and Technology Innovation in Smartphones." By 2014, that number is projected to reach 442.9 million, with Asia Pacific accounting for 161.9 million smartphones and 85.4 million devices in Western Europe.

"The smartphone market will remain highly fragmented in the next five years," Frost & Sullivan senior industry analyst Saverio Romeo said in a statement. "Although traditional participants across the smartphone value chain will continue to dominate the market, there will be more collaboration between consumer electronic device manufacturers, and new technology vendors will be the trendsetters in the mobile market."

The demand for smartphones is being fueled by a consumer desire for ultimate converged devices that support functionalities such as touchscreen, camera/video support, dual SIM card, Wi-Fi, and integrated GPS. The research suggests that application developers and social media and Internet communities will gain more prominence in the wireless and mobile market, resulting in further collaboration.

Another factor that will influence revenue growth in this market will be falling average sale prices. Over the next four to five years, the smartphone market will also be greatly impacted by diverse operating system platforms, intense competition among smartphone manufacturers, and the devices' poor battery life, in trying to support multiple access technologies.

"Users are moving towards a complex and rich mobile experience made of communication, entertainment, and productivity services,'' said Romeo. "The smartphones are the right devices for this experience. Their role will increasingly become vital in the mobile communications market driving diffusion of new services and applications."