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Smartphones Eroding Laptop and Cell Markets
November 19, 2007 |Estimated reading time: 1 minute
SCOTTSDALE, Ariz. and EL SEGUNDO, Calif. Smartphones are on pace to grow at a more than 30% compound annual growth rate (CAGR) over the next five years, according to research firm In-Stat. Computing companies from Google to Apple likely will succeed in making the leap from PC-based products to smartphone integration, add analysts at iSuppli.
Smartphone use will grow primarily as a laptop substitute, and as a tool for manufacturers to develop feature phones, reports In-Stat. Unit volume of smartphones exceeds unit sales of laptops globally, the company asserts. The key to smartphone adoption is significant value for the user, meaning more applications downloads and higher usage by average revenue per user (ARPU) for wireless carries. This is helping smartphone growth surpass the overall phone market, which is expanding by single-digit CAGR. In-Stat qualifies this information in "Smartphones 2007: The ARPU Generation Machines," part of its worldwide mobile devices service. The report provides sales forecasts through 2011; a discussion of manufacturers and the ecosystem for smartphones; and market drivers, barriers, and analysis.
Google represents one computing services company making the jump to services targeting smartphones, part of its Open Handset Alliance. Google plans to promote a new platform, the Android software stack, for mobile handsets through this consortium of companies. The platform will provide Internet access on smartphones at no or little cost to handset OEMs.
The Google approach eliminates a node in the value chain, says Francis Sideco, senior analyst, wireless communication, iSuppli. This could lower the end cost for consumers in the already fast-growing mobile electronics segment, iSuppli says, but the undertaking is "bold." Other companies have attempted to establish mobile/wireless computing in the past and failed to create a market standard.
Google needs to partner with a manufacturer and create its own category of smartphones with millions of units sold to succeed, according to iSuppli. Interest in smartphones among consumers is high, as In-Stat indicates, and selling a large amount of this product will create de-facto market standards. iSuppli cites the iPhone from Apple as an example of successful market adoption in a new segment of smartphone capabilities. The analyst firm predicts that smartphone sales will top 300,000 units by 2011 (Figure 1.)
For more information on the smartphone market, see www.in-stat.com. For more on iSuppli's analysis of Google's smartphone initiative, visit www.isuppli.com.