Smartphone success confined to developed markets as emerging markets lag behind

By Denise Duffy
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By Denise Duffy

9/30/2010 2:31:07 PM -

Smartphone vendors need to develop a dual strategy


London, UK – September 30, 2010 - Informa Telecoms & Media forecasts the number of smartphone users to reach almost 1.4 billion by the end of 2015, which will represent about 30% of total mobile subscribers worldwide. However, despite this success there will be significant disparities of smartphone adoption and business cases between the developed and emerging mobile markets. While in some markets, such as Japan, Western Europe and North America, more than 70% of all mobile subscribers will be using smartphones by the end of 2015, some emerging markets, including Africa, India and some countries in Latin America, will have less than 15% by that time.

In the developed world the competition between the leading OSs including Android, Apple, Blackberry, Microsoft and Symbian will continue to be intense. Symbian and Android will be clear leaders in Western Europe in 2015, while in North America the smartphone battle will continue to be between Android, Apple’s iPhone, RIM’s Blackberry and Microsoft’s Windows Phone, to a certain extent. In the emerging markets, Symbian will dominate. However, the Android platform is anticipated to gain traction very rapidly in these regions thanks to its ability to fit to low-cost requirements of the region.

“The main drive for growth in the smartphone market will continue to be from the developed markets – particularly North America, Western Europe and Japan, which between them will accounted for 598.3million smartphone users, 43%of the global total number, at the end of 2015,“ commented Malik Kamal-Saadi, principal analyst at Informa Telecoms & Media. “These devices are becoming key differentiating tools in developed markets and device vendors, chipset makers as well as operators are rushing to offer the best possible user experience to their customers and build a brand associated with mobile broadband services.”

In contrast, consumers in some emerging markets have not experienced smartphone fever yet. The lowest smartphone penetration levels are currently recorded in regions such as India and Africa. At the end of 2009, smartphone users in India, for example, only accounted for 4.6% of the total number of mobile subscribers, while in Africa, this proportion was 5.1%.

“Mobile operators in these regions are still making a considerable amount of money from voice, SMS, and some basic data services and will take their time to decide on the best ways to push smartphones to the mass market,” continued Kamal-Saadi. “Beyond 2015, we expect the smartphone battleground to move into the emerging markets as broadband networks are deployed.”

The slow takeoff of smartphones in emerging markets is partly due to the still unconvincing user experience of mobile data services. Development of local content as well as the launch of 3.5G networks nationwide will be key for the takeoff of mobile broadband services and smartphones as enabling devices. However, rollouts of 3.5G networks are still in their nascent phase in some key markets such as in India, China, Latin America and Africa. In 2010, the percentage of 3.5G+ users out of the total subscribers in China and India is not expected to exceed 1% while this ratio is expected to be around 3% and 6% in Africa and Latin America respectively.

Another reason for the low penetration of smartphones in these regions is the high price. Indeed, in markets where prepaid subscriptions are predominant and device subsidies is not a common practice, it will be hard for smartphones to reach the mass market unless their prices go below US$80 barrier. OS platforms that will reach this ASP level will be will be able to influence the smartphone trend in these markets; Symbian and Android are the best positioned to achieve this end.

“The regional differences between developed and emerging markets will push the device vendors into adopting a dual strategy: one for the emerging markets and another for the developed ones,” Kamal-Saadi concluded.

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