Great News for Smartphones, but Some Cause for Concern

Carl Weinschenk
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Anybody with even a passing interest in the mobile game is well aware that smartphones have been systematically encroaching on the territory held by feature phones. That trend now has become an official victory: IDC said that during the first quarter of the year, 418.6 million handsets shipped. For the first quarter ever, more than half of them – 216.2 million – were smartphones.

Such milestones are funny things. They are important, but the incremental gain from the last measurement may not have been that much. The bottom line is that while the general thought long has been smartphones are strong and feature phones are fading, people perhaps don’t realize how far the tide has turned until such numbers are released.

Another study – this one from the Consumer Electronics Association (CEA) – suggests that smartphones and tablets have enmeshed themselves deeply into the way in which people do things. eWeek reports that the devices have become the go-to gadgets for a majority of people:

With the exception of notebooks, smartphones and tablets are being used more often and for more activities compared with most stand-alone devices. Smartphones have become the primary device for taking pictures (78 percent), recording videos (74 percent), getting directions (69 percent), reading ebooks (62 percent), listening to music (59 percent) and playing games (39 percent), according to the study.

The other interesting takeaway from the IDC results is that there is a good deal of fluidity in the vendor community. GigaOm reports that IDC found that of the top five smartphone vendors during the last quarter of 2011, only two -- Samsung (featuring Android-based devices) and Apple -- remain. HTC, BlackBerry and Nokia have been pushed aside by LG, Huawei and ZTE.

Another snippet of insight into how smartphones are doing comes indirectly from Qualcomm, which makes the processors that drive the devices. The company’s revenue jumped 24 percent compared to the year-ago quarter. The Venture Beat report on the results suggests that the news will continue to be good:

Don’t expect Qualcomm’s growth to slow down anytime soon. Its chips power the latest high-end smartphones, Samsung’s Galaxy S4, HTC’s One, and BlackBerry’s Z10, and we’ll be seeing them in even more devices throughout the year. At this point, the company has a huge head start on Nvidia’s Tegra 4 mobile chip, its closest competitor in terms of power and efficiency.


The one constant, however, is that things change rapidly. The dynamic for the past few years has been the growth of Apple and Samsung. Indeed, this has been the driver that has led to the smartphone’s supremacy. Most recently, Apple has experienced some unaccustomed challenges. Now, it seems, the industry sector may be hitting a rough path, at least according to StreetInsider’s report on Samsung’s first quarter results:

Additionally, given the breadth of the markets that Samsung operates in, some might speculate that smartphone and mobile device sales are getting choppy. Even Apple's most recent quarterly results evoked nothing too much more than a "harumph!" from traders and analysts. But, a sharper downturn in the traditionally slow first-quarter might hit at potential market saturation, or the need to start a larger conversion of feature phone users into smartphone users.

That’s all a rather mixed-up picture: Smartphones are ascendant, but the situation is far from stable. Vendors, service providers and others in the smartphone sector should celebrate their success. They also should remember that nothing lasts forever.



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