November 15, 2004
LONDON -- Worldwide annual sales of smartphones are expected to grow 89% from 14.6m units in 2003, to 27.6m units in 2004. In 2003, smartphone sales accounted for 3% of the total handset market and, by 2009, this ratio is expected to exceed 16% representing 125m units. In 2003, 67% of shipped smartphone devices were powered by third-party open OSs. In this market, the use of proprietary OS solutions is expected to progressively decline over the years and reduce to approximately 10% of the total smartphone market by 2009.
Asia Pacific currently has the greatest number of smartphone users, led by Japan and South Korea in particular but with plenty of interest in other parts of the region as well. As a result, this region currently holds the lead in smartphones sales with a 37% share. "This is not surprising since wireless data services have been launched in this area since early 2000. About 60% of smartphones shipped in this region are powered by proprietary OSs as the majority of local manufacturers continue to favour proprietary OSs over third-party open OSs for devices shipping in this region." says Dr Malik Saadi, senion analyst at the ARC Group and co-author of the leading report Future Mobile Handsets 2004.
The growth of smartphone shipments in Asia Pacific is expected to increase over the forecast period, but will slow down slightly after 2006. This will be due to an anticipated degree of saturation of both the Japanese and Korean markets. By 2007, further growth in the region will be steady but dependent on, and closer to, the level of economic growth in the region mainly in some developing countries such as China and India. Future Mobile Handsets report forecasts the total number of smartphone users to reach 75.5m by 2009.
In 2004, The European market is expected to maintain its second position in terms of market share, with 27% thanks to the popularity of low-end smartphones in this region, mainly those powered by Symbian with Nokia series 60. Smartphone growth in Europe will be sustained by the higher level of disposable income, combined with the takeoff WCDMA and the near ubiquitous GPRS coverage. After 2007, European smartphone users are expected to hold the highest market share, which will reach almost 92m smartphone users by 2009.
North America currently holds third position, closely behind Europe, with a market share expected to reach 25% by end of 2004. The adoption of these smartphones by North American users is essentially due to the significant penetration of mobile computing technology in the region, where the population is very familiar with data networks. WiFi has been adopted enthusiastically, and although the higher data connection speeds now offered by CDMA 1xEV-DO, EDGE and WCDMA will match and exceed those of WiFi, early adoption of WiFi, and early price comparisons between the technologies are likely to mean that established WiFi users will prefer to stay with the technology. ARC Group forecasts show North American smartphone users in third place throughout the period covered. In 2009, the American smartphone market is expected to reach more than 30m units and 64m smartphone users.
Smartphone subscriber growth in South America and Rest of the World will be very high during the next two to three years, while data networks roll out and users with high disposable income take up the services. However, growth rates will then slow to a steadier pace as usage moves to lower income brackets, and will continue to slow steadily through the remainder of the period.
In the Global smartphone market, ARC Group's Future Mobile Handsets anticaptes a significant volume migration from low-end to high-end segment of the smartphone market throughout the forecast period. During the period, low-end smartphone shipments will stabilise as many of the functions they offer are incorporated into standard feature phones. At the same time, demand for high-end smartphones will continue to grow steadily, so that their overall share of the global handset market will increase.
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