Explosive smartphone growth driven by new features and ease of use, says IMS Research

Press release, November 2; Eric Mah, DIGITIMES [Friday 2 November 2007]

The smartphone segment of the handset market is forecast to experience strong growth, increasing from just over 10% of the market in 2007, to more than 25% of the market by 2012, according to IMS Research.

The growth in the smartphone market is being driven by a new breed of smartphones, which are decidedly more consumer friendly, noted the research firm. Historically, new technologies have been positioned as a unique selling point for the handset, as was the case with digital music players and cameras. These are attractive to customers, but have offered limited operator revenues returns to date.

The next generation of smartphones will see greater uptake from a wider range of consumers by utilizing the latest technologies to remove the key barriers to revenues generating services and applications, including enhanced appearance, usability, and functionality. Manufacturers and operators have learned from past missteps in this area, and are now targeting technologies not just for their unique selling points, but also for their ability to drive revenues. These technologies include GPS/ location-based services (LBS), capacitive touch screens, enhanced voice applications, and redesigned graphical user interfaces.

"Developers and manufacturers are designing glossy, manageable systems that allow end-users to easily access the desired applications – they are now beginning to look like they were designed by designers, not by engineers," stated mobile technologies director John Devlin in the October edition of IMS Research's Mobile Insights.

Capacitive touch screens, sensors, advanced speech technologies, and significantly improved graphical user interfaces are all seeing growth in smartphones, helping to drive consumer uptake and enabling increased operator average revenues per user (ARPU). These technological advancements in input technologies not only flatten the menu to encourage the user to try applications and search out new features, but also provide innovative new input methods. The input technologies section of Mobile Insights forecasts the speech I/O market to increase five fold over the next four years and touch screens (both resistive and capacitive) to account for 45% of the smartphone market by 2012.

In the GPS/LBS section, Mobile Insights also discusses the combination of speech technologies, GPS and mobile search to enhance the user experience and drive adoption. "These technologies will make mobile Internet search easily accessible and relevant. The experience will be different to a PC, information can be filtered by location and time" according to analyst Patrick Connolly in Mobile Insights. "Leading Internet search companies, like Google and Microsoft, are spending a lot of money on acquisitions and research, relating to this concept. By leveraging their experience in advertising, the revenues potential is huge."

"These developments lead us to believe that the smartphone market will continue to return higher than average growth than the market as a whole," stated Devlin. "In fact, IMS Research's Online Cellular Database shows that in 2012 more than one in four handsets will be a smartphone with more than 1.5 billion being sold. With the higher margins associated with such top-end products, it's no surprise that the gold rush is already underway."