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Pyramid: Euro Smartphones Poised for Growth

A new report from Pyramid Research predicts that total European smartphone sales will grow 22 percent in 2009 compared with the previous year, even as overall handset sales on the old continent drop 21 percent.

Indeed, the report, "Europe's Smartphone Market: Sustained Growth Is at Risk," has some sweet and sour predictions for smartphone makers such as Apple Inc. (Nasdaq: AAPL), Nokia Corp. (NYSE: NOK), and BlackBerry . The report's author, Pyramid analyst Stela Bokun, suggests that market expansion could be at stake, even as some European economies are starting to lead the way out of the global recession.

Bokun says that smartphone growth in Western Europe will mainly be "robust." It is the Central and Eastern (CEE) regions of Europe that could drag the numbers down somewhat.

"Even when the region's economy is doing well, device vendors and operators typically report much lower smartphone handset sales in CEE countries," she writes. "Recently this situation has worsened significantly: Many CEE countries are seeing staggering GDP declines, significant currency devaluations and skyrocketing unemployment."

Methods for smartphone vendors to keep up with demand in Central and Eastern Europe largely center on getting smartphone prices down. Bokun notes that vendors such as Samsung Electronics Co. Ltd. (Korea: SEC) have been active in trying to introduce lower-cost models in the region.

More worryingly for Western European carriers, Pyramid is predicting a dropoff in data revenues in 2009. Smartphone applications will have to be compelling for uptake to remain unaffected by the economy.

"By focusing more on retaining their most lucrative customers -- smartphone users -- and encouraging these customers to use their mobile data networks, operators will keep their margins comparatively stable in the current economy and increase them once the economy improves," Bokun writes. "In other words, today's short-term survival strategy will turn into a winner in the medium term."

— Dan Jones, Site Editor, Unstrung

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