New Capabilities Will Drive Smartphone Sales

Emerging applications will drive future smartphone sales, according to a recent IDC survey of more than 4,000 mobile phone and smartphone subscribers from five countries. The survey results, part of a multiclient study, show that interest in Wi-Fi access and location-based services are highest in the United States and the United Kingdom, while storage capacity, music quality, and photo quality are the highest in Germany, India, and China. "The U.S. and the U.K. are more established markets, so providers have had [the ability to offer] location-based services for a longer time; the problem was finding the right price point. Now those services are beginning to roll out," says Randy Giusto, group vice president for IDC's mobility, computing, and consumer markets research. "India and China have very entertainment-focused markets." Whatever the case, it means growth for smartphones here and overseas, Giusto says. "The mobile device today is increasingly becoming a multitalented productivity and entertainment tool, and next-generation networks, services, and device technologies will only amplify that perception." However, revenue-per-user growth (based on percentage growth) from those sales won't be what they were last year in the U.S., according to Giusto. (IDC didn't measure international revenue per user growth overseas last year.) "Many of the monthly plans have come down in price," Giusto says. "There are more smartphone devices. It used to be just RIM [BlackBerry] versus [Palm's] Treo. Now there are Nokia, Sony Ericsson, LG, Samsung, and Motorola devices." So there is more price competition. As a result, carriers are subsidizing more of the costs of these devices. For example, T-Mobile offered the Motorola Pearl smartphone earlier this year for $399. Now the price is $199. Additionally, smartphone subscribers are generally more satisfied with their devices than mobile phone subscribers, which leads to heavier use and greater spending once they get the devices, meaning it's harder to maintain percentage growth figures as the base of users continues to grow. Overseas, by contrast, the subsidies aren't what they are here, but carriers are offering financing plans to enable users to buy upscale phones on time payments. That's important as these devices move from the enterprise to the "prosumer" (upscale consumer) market, Giusto says. "That's a huge market. Here you talk about millions of users. There it's billions of users." Giusto expects further smartphone penetration into the prosumer market here and overseas in 2007. "Manufacturers are putting more thought into design and into making plans more appealing to consumers." Related articles: Wireless Connectivity Is Kicked Up a Notch
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