Phone Market To Shrink In 2009, Smartphones Still Climb - InformationWeek

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Commentary
3/13/2009
03:40 PM
Ed Hansberry
Ed Hansberry
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Phone Market To Shrink In 2009, Smartphones Still Climb

IDC is forecasting mobile phone shipments down 8.3% in 2009 as the world wrestles with a downturn in the economy. This is after they rose 4.3% in 2008 over 2007 levels. It gets even worse if you look at specific markets like Europe, Japan, and the United States, where year-over-year declines could approach 24%. The growth drivers in recent years like China and Russia will have breakeven years. What's interesting though is th

IDC is forecasting mobile phone shipments down 8.3% in 2009 as the world wrestles with a downturn in the economy. This is after they rose 4.3% in 2008 over 2007 levels. It gets even worse if you look at specific markets like Europe, Japan, and the United States, where year-over-year declines could approach 24%. The growth drivers in recent years like China and Russia will have breakeven years. What's interesting though is this decline is mainly affecting the basic cell phone, or what I call a feature phone. Those are the phones that are often free from your carrier with a contract and have a few, very specific set of features, but no real ability to sync with your data or add much more than tiny Java apps to them. Smartphone growth in 2009 will still be just over 3%.The IDC article attributed the continued, albeit scaled back, growth in smartphones to the iPhone and its App Store. To be sure, the iPhone has changed the smartphone landscape, but it didn't invent it. Windows Mobile, Palm, BlackBerry, and outside of the United States, Symbian S60 really started the smartphone market and except for Palm, are still the top sellers in the category. Newcomers like Android and the forthcoming Pre have yet to make a serious dent in the market.

Let's give credit where credit is due. The iPhone has changed how other smartphone makers are developing their own platforms. The iPhone showed you could have a decent browser on your phone. I have no doubt that without the iPhone, Windows Mobile developers wouldn't have pushed as hard to get the new Internet Explorer 6 Mobile out as soon as they did. The iPhone touch screen has pushed everyone to either add or enhance exiting touch devices. Android, the Palm Pre, and Windows Mobile now all have the flicking gestures on their new touch-screen devices and even emulate the movement on their non-touch-screen devices.

I think there is a bit more to the resilience of the smartphone market, though, compared with the feature phone market. I know a number of people that picked up some sort of smartphone so they could check e-mail or have some basic Web access when traveling. Corporations, too, have driven smartphone sales, especially those of the BlackBerry and Windows Mobile, as those can be easily integrated into many company's infrastructures. BlackBerry, Windows Mobile, Palm, and Android either have or are getting their own application store this year, which helps spur interest in smartphones as consumers learn you can add functionality to your phone the same way you can to your PC.

The bottom line is, more and more people are interested in more than just making voice calls or sending text messages. Smartphones allow people to put their data in the cloud, keep information on their PC and phone in sync, peruse movie times or their Facebook page, and much more. Feature phones may only allow a few of these specific items. Relative to the feature phone market, smartphones should continue to grow. It doesn't hurt either that you have a dazzling device like the iPhone that raises general awareness and keeps the competition from resting on their laurels.

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