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Consumers Are Pushing Up Sales of Smartphones

Consumers are driving growth in the smartphone market, which rose 41.1 percent worldwide in the fourth quarter compared to a year ago. Overall mobile-phone sales also gained in the quarter, helped by low-end devices. Even with rising sales, mobile-phone makers have had to deal with price pressures, especially in developing markets. Mobile-phone sales worldwide headed up at the end of last year, according to a new report from industry research firm Gartner. Sales in the fourth quarter posted a 8.3 percent increase compared to a year ago, although overall 2009 sales dropped 0.9 percent.
Gartner said the drivers pushing up sales are smartphones and low-end devices. Smartphone sales, said Gartner Research Director Carolina Milanesi, "continued their strong growth in the fourth quarter of 2009," up 41.1 percent over 2008 to 53.8 million units. For all of 2009, smartphone sales were up 23.8 percent.

Android Versus Symbian?

The big smartphone winners were Research In Motion and Apple, which now have 19.9 and 14.4 percent of the worldwide smartphone market, respectively. As premium devices, they spent last year busily capturing market share from other devices. Their operating systems still trail Symbian, which has nearly half the market with 46.9 percent.

Microsoft 's Windows  Mobile is in fourth place for smartphone OSes, with an 8.7 percent share, followed by Linux  and Android in low single digits, and Palm's webOS below a point.

A key battle shaping up in 2010 could be the one between the two leading smartphone open-source operating systems, Android and Symbian. The Symbian Foundation said recently that a new version of its OS should be available by the end of March, which will be the first since the OS became fully open source. Android increased its market share last year by 3.4 percent, to 3.9 percent, but last year was its first full launch year.

Avi Greengart, an analyst with industry research firm Current Analysis, said that, "despite the recession, people are investing in smartphones," which accounts for their continued strong sales performance . And, he said, "there is no question" that most of those buyers are consumers.

Samsung and LG Electronics

In addition to the growing competition between the iPhone and RIM's BlackBerry, other mobile-phone makers have had to deal with downward price pressure, notably in developing markets like China and India. In fact, three of the top five makers showed a decline in sales last year.

Nokia went from 38.6 percent market share to 36.4 percent, which Milanesi attributed to its "ongoing weakness at the high end of the portfolio" as improvements to its Symbian platform and new products based on its MeeGo operating system  will not get to market until the latter half of this year. Motorola and Sony Ericsson also saw single-digit drops.

Among the top five, only Samsung and LG Electronics increased market share. Samsung's 3.2 percent rise, according to Gartner, was driven by its "improved channel relationships with distributors," as well by a well-stocked mid-tier portfolio of products. Samsung, like all mobile-device makers, has learned the value of a solid ecosystem, and Gartner said the company will focus on that effort this year, in part by building up its new bada operating system.