ABOUT THIS REPORT

While worldwide handset shipments have shrunk during the turbulent economic slowdown of 2008-2009, smartphone shipments have seen moderate growth, driven primarily by demand in the developed markets of North America and Europe.

Smartphones accounted for 13.8 percent of worldwide handset shipments in 2009, and will grow to account for nearly 25 percent by end-2014, when annual smartphone shipments hit almost 371 million. Significantly, worldwide smartphone shipments during 2009-2014 are expected to grow at an impressive Compound Annual Growth Rate (CAGR) of 18.5 percent, over triple the CAGR of handset shipments during the same period.

This new market study looks at the entire smartphone ecosystem in eight fact-filled chapters: 

• Introduction (Handset Market Summary; Emergence of Smartphones)
• Smartphone Market
• Smartphone Value Chain
• Smartphone Vendors
• Operating Systems
• Applications and Content Market
• Summary and Conclusions

THE SMARTPHONE MARKET

Significant developments in the worldwide handset market over recent years, including the arrival of players like Apple and Google, have radically changed the shape and future course of this industry.

The smartphone has undergone major changes in recent years and industry giants who have long dominated the market have suffered at the hands of new players that are fast making their mark in the industry.

Yet analysis on a worldwide level alone misrepresents the struggle- and in some instances the inability - that these new entrants have in unseating incumbent players in local markets. Local vendors often continue to retain market share in their primary region of operations, despite heavyweights making every effort to erode it. A prime example is the Japanese market where the likes of Nokia, RIM, Apple, HTC, Motorola and Samsung find it difficult to compete against local vendors. Till now such local players have typically enjoyed strong domestic sales but very little international presence, but this will change as they plan geographical expansions by building and strengthening their distribution channels. For a variety of reasons (explained in this report), vendor success in one market may not be possible to replicate in others, and knowing why will allow major vendors to better understand their markets and, in some respects, their limitations.

The worldwide handset industry can be divided the pre and post iPhone eras.

Before the iPhone, the mobile handset industry was primarily characterised by low-end and mid-end handsets, which were predominantly used for basic voice and limited data services. However, in 2007, the iPhone launch changed the way users perceived their mobile handsets and user expectations - of what a handset should do and be - sky-rocketed.

The major differentiating factor between smartphones and other handsets is the presence of an open Operating System (OS). The OS, through its Application Programming Interface (API), enables subscribers to install and remove third-party applications. Smartphones, along with their associated services and applications, have been received well by subscribers in most developed markets, and this has provided an opportunity for many Mobile Network Operators (MNOs) to increase their Average Revenue Per User (ARPU). The success of smartphones in developed markets has prompted Original Equipment Manufacturers (OEMs) and MNOs operating in emerging markets to launch smartphones to push more Internet-based services and better cater to the enterprise segment.

The smartphone market has been witnessing intense competition among smartphone vendors who are trying to outdo the others through product innovations, inclusion of more features, aggressive marketing and more investment in R&D, and through strategic acquisitions. Currently, there is a distinct top-3 in the smartphone market: Nokia, RIM and Apple. Beyond that, the market is quite fragmented with - as mentioned - local players also having significant regional presence.

Smartphone vendors know that their products alone are inadequate differentiators because their features can be copied quickly. Therefore, they are looking to use content and applications to differentiate their offerings and increase customer loyalty. Content and applications-apart from giving an edge to the products-enable vendors to generate new revenue streams, and this space is fast becoming an attractive opportunity for established smartphone vendors, OS providers, and developers.

TABLE OF CONTENTS

Introduction
Handset Market Summary
Handset Shipments
Handset Revenues
Handset Market Evolution and Emergence of Smartphones
Restructuring of the Mobile Handset Market
Regions of Strength
Nokia
RIM
Apple
HTC
Emergence of the Smartphone
Impact of Recession
The Curious Case of Asia Pacific
Comparison of BlackBerry and iPhone Growth
Smartphone Market
Smartphone Value Chain Key Players in the Value Chain
Smartphone Vendors
Market Share of Smartphone Vendors
Regional Market Share of Smartphone Vendors
Nokia
Research In Motion
Apple
HTC Corporation
Motorola
Sony Ericsson
Palm
Operating Systems
Market Share of Operating System Providers
Regional Market Share of Operating System Providers
Symbian OS
BlackBerry OS
Apple iPhone OS
Microsoft OS
Android OS
Applications and Content Market
Apple's App Store
BlackBerry's App World
Nokia's Ovi Store
Android's App Market
Symbian's App Store
Positioning of Applications Stores
Summary and Conclusions
Positioning of Smartphone Vendors
Positioning of Operating System Providers
Appendices
Glossary
Portio Research Classifications
Companies Mentioned in this Report
About the Authors

FURTHER REASONS TO BUY THIS REPORT

• New and essential forecasts and market data
• Learn how local vendors fight off global heavyweights
• Compare the pre and post iPhone eras
• Uncover the vendors to watch and fear
• Appreciate the vital role of App Stores
• Assess vendor market shares and shipment forecasts
• Benefit from worldwide and regional level analysis
• Identify new ancillary revenue streams
• Improve familiarity with operating systems