Smartphones sales to take 28% of handset market this year

Sales of smartphones will exceed 420 million devices in 2011, accounting for nearly one third of the entire global handset market.

With the introduction of more affordable entry level smartphones, IMS Research, independent provider of market research and consultancy to the global electronics industry, predicts that annual sales will surpass one billion devices by the end of 2016, accounting for one of every two mobile handsets sold.

This year smartphones will take hold of 28% of the total mobile handset market, claimed IMS.

“But despite the higher margins for smartphones, and the seemingly insatiable consumer appetite for converged devices, it is clear that not all OEMS are equally positioned to capitalise on this market trend,” said Josh Builta, analyst in IMS’ mobile technologies group. “For instance, LG, despite being the third largest OEM in the world, has offered a fairly limited smartphone portfolio in recent years, a factor that resulted in the company reaching less than a 3% share of the total smartphone market in 2010.”

At the same time Nokia saw its portion of smartphone market decline so dramatically that in early 2011 the company dropped the Symbian platform in favour of Microsoft’s Windows Phone OS. In 2Q 2011, Nokia reported smartphone sales fell to 16.7 million, down 34% from the same period in 2010.

“Clearly one of the key dynamics of the mobile handset competitive environment in recent years has been the inability of many traditional market leaders to recognise and adjust to the growing smartphone tier,” added Builta. “The reasons for these failures vary and include everything from poorly designed and manufactured devices, unsatisfactory user interfaces, and portfolios that don’t offer products with a differentiating feature. These lapses have created opportunities for newer entrants to the market, which they have aggressively pursued.”

In recent years, no company has flourished in this environment as much as Apple. Apple’s 2Q 2011 results in which it reported record sales of more than 20 million iPhones indicates it can be expected to remain an influential presence in the market despite the increased competition.

However, Apple is not alone in its success. Of the traditional handset manufacturers, Samsung has demonstrated the best results in recent years. Capitalising on its diverse portfolio, which includes devices using the company’s own bada operating system along with Android and Windows Mobile, as well as its highly popular Galaxy series, Samsung smartphone marketshare increased from about 3% in 1Q 2010 to over 13% in 1Q 2011. At the same time smaller, dedicated smartphone vendors such as HTC have seen their position rise dramatically.

According to Builta: “These companies are well positioned to benefit from the projected growth of the smartphone market in the future. Though the other OEMs are stepping up their efforts in the space, companies such as Apple, HTC and Samsung have a considerable amount of momentum. Catching them will not be an easy task.”