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According to Gartner, the global economy is taking a bigger and bigger bite out of feature phone sales. They are reporting that as found by their recent study, just over 286 million handsets were sold in the second quarter worldwide this year, down 6.1% from the same quarter last year. This deepens the gloom from the first quarter of this year, which saw 9.4% decline. This is now officially the worst slump in mobile handset sales in history.

However, there is a ray of sunshine to be found in smartphones sales. Unlike feature phones, they are on the rise. In Q2/09, the sales of smartphones such as Apple Inc’s iPhone, Nokia Corp.’s N97, Palm’s Pre and the BlackBerry Bold rose by 27% to 41 million units globally, following similar gains last quarter. This is partially because vendors and service providers are using their marketing money to promote smartphones due to the higher profit margins and data plan revenue involved. However, I feel it also shows that feature phones are static, tending to come with standard, ubiquitous features with no strong reason for consumers to swap phones in these hard economic times. Unless you have to, why buy a new phone that is pretty much the same as your old one. Smartphones however are developing rapidly with higher speeds and more features, so people are more willing to trade up for the newest model. Also, smartphones are more likely to be used by tech enthusiasts or business people willing to spend more (or use corporate budget) for the latest devices.

Due to these numbers, I think we will see vendors continue to focus heavily on smartphones over feature phones in 2010, especially as we will see a massive increase in Android handsets and the debut of Windows Phone (aka Windows Mobile 6.5 and 7). All of that new shiny will just further drive the growth of smartphones over feature phones.

(Source: Wall Street Journal)

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Zealot (476 Posts) - Website | Twitter | Facebook

By day a department manager and writer for a major network device vendor...by night Zealot stalks the mean magnetic streets, striking fear into the hearts of bandwidth abusers and theme park mascots. Zealot has been involved with mobile devices for more than a decade now, starting off with dumb phones, moving to PDAs and then to smartphones, notebooks and netbooks with the odd PMP thrown in. Most of his mobile time currently is spent on a Treo Pro, Zune HD, Thinkpad T61, Gigabyte M912M or a Hackintoshed Compaq Mini 704. He proudly groks the Geek community and considers himself a Neo Maxi Zune Dweebie (thanks Will Wheaton!).