Informa Telecoms & Media predicts that the smartphone segment will be the fastest growing part of the mobile handset market in 2006, showing a year-on-year volume increase of over 40%. This is among the findings of a new report, ‘Mobile Applications & Operating Systems: 3rd edition’. Other segments will show slower rates of expansion of 4% for basic phones, 19% for low feature phones and 20% for feature-rich non smartphones. Informa predicts that the mobile handset market will continue to enjoy healthy growth with sales expected to reach 943mn units in 2006, from 814.5mn units in 2005. Although the feature-rich phone market, particularly smartphones, will continue to enjoy healthy growth at a compound annual growth rate (CAGR) of 35.5% until 2011, sales of basic phones will start to decline from 2007 to reach about 129mn units sold in 2011 from 239mn in 2006. In 2011, low feature phones will represent the second smallest segment as sales of these devices will start to decline from 2010 and will reach 431mn in 2011 from 455mn in 2009.

“While the handset market continues to enjoy healthy growth, vendor differentiation is becoming increasingly complex owing to the growing number of features and functionalities these devices are required to handle”, commented Malik Saadi, Principal Analyst at Informa Telecoms & Media and lead author of the report. “Market segmentation continues to challenge mobile OS and application platforms developers to offer appropriate software for each segment. As a result, developers need to offer greater levels of customisation and granularity in their platforms if they want to widen their appeal across a range of operators’ and device vendors’ handset portfolios. For these players, the most pertinent segmentation is that based on handset technology.”

The increased interest in open OS by both operators and device vendors will see smartphone sales growing strongly from 53.7mn in 2005 to 75.1mn in 2006 and reach 333mn in 2011. The strongest forecast growth to 2011 is expected to be in the area of feature rich low-end smartphones, mainly due to significant price reductions of these devices and improvements in their multimedia capabilities. Indeed sales of these devices are expected to increase at a CAGR of 46.7% until 2011. A portion of this growth will be due to the replacement of feature rich non-smartphones by smartphone powered devices. As a result, smartphones will represent almost half of all feature rich, and more than one in four of all, handsets sold in 2011.
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