Feature phones are still the majority in the mobile phone market, but smartphones are quickly creeping up. Low-end smartphone models are leading the way. So says a report from IHS iSuppli.
By 2015, IHS iSuppli expects smartphones to take over. The firm's data predict that global smartphone unit shipments will soar to 1.03 billion units in 2015, more than double the 478 million in 2011.
That would increase the smartphone sector's share of the global mobile phone market to 54.4 percent in 2015, up from 32.5 percent in 2011. Smartphones made up only 15.8 percent of the total cell phone market in 2009.
Low-End Leads the Way
"With their affordable prices, low-end smartphones are attractive to first-time users and to consumers in emerging economies where subscriber levels are rising at the fastest rates of all regions of the world, such as China, India, South Asia and Africa," said Francis Sideco, principal analyst of wireless communications for IHS.
IHS iSuppli research indicates the fastest-growing category within the smartphone market will be low-end models. Low-end models are defined as devices with limited features and lower memory densities compared with higher-end products, like the iPhone.
IHS iSuppli expects shipments of low-end smartphones to rise at a compound annual growth rate of 115.4 percent from 2010 through 2015, compared with just 16.4 percent for midrange to high-end smartphones.
"Low-end smartphones often are sold with inexpensive tiered data plans that target consumers who do not yet need full-featured services," Sideco said. "This further reduces these phones' total cost of ownership, making them attractive to vast numbers of entry-level consumers."
Apple dominates in the high-end smartphone space. Who will win in the low-end space? IHS iSuppli pointed to Samsung as a contender. Samsung posted the strongest growth of all companies in the second quarter, with a 600 percent sequential increase in shipments. Its line of low-end smartphones that appeal to consumers in China and Latin America drove that performance.
That said, mobile apps are also driving the adoption of smartphones.
"Success in the mobile phone industry is no longer purely a function of hardware capabilities," Sideco said. "Growth for all players is being determined by a number of other important factors, such as software capabilities, the sleekness and intuitiveness of the user interface and the availability of a variety of applications."
Michael Disabato, vice president of Network and Telecom at Gartner, agreed with the overall predictions in IHS iSuppli's report. He, too, expects smartphones to overtake feature phones in the next few years.
"Consumers in countries like China and India are getting the low-end smartphones, and they will get the higher-end smartphones as they can afford them," Disabato said.
"Advertising is selling these devices, and the kids are going to school, where peer pressure is selling the devices. Handset makers are putting more and more functionality on a smartphone and giving you less and less a need for a laptop."