Smartphones - at Least Some Types - Continue to Rise

Carl Weinschenk
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An important milestone was reached during the fourth quarter of 2011 when smartphones outsold personal computers, according to Canalys.

According to the story at eWeek on its findings, 158.5 million smartphones were shipped, an increase of 57 percent over the 101.2 million shipped in the fourth quarter of 2010. The firm said that 120.2 million PCs shipped. The numbers are all the more surprising because tablets are included in the PC category. Canalys also offered year-long numbers: 487.7 million smartphones to 414.6 million PCs. Tablets counted for 63.2 million of the PCs.

To a great extent, the juxtaposition of smartphones and PCs is an awkward one. Though they overlap in function more than traditional cell phones and PCs, they clearly have significantly different use cases. Also, the fact that smartphones still are new and just reaching large segments of the population while sales of PCs figure to be almost exclusively replacement devices will skew sales figures for the year. Finally, smartphones have far shorter replacement cycles than PCs, which makes an apples-to-oranges comparison more like apples to camels. Despite such caveats, it is an impressive and important crossover, even if things revert once the initial demand for smartphones is satisfied.

More up-to-date information on the state of the smartphone was released last week by IDC. The firm found that the overall growth of the worldwide cell phone market was 6.1 percent last year compared to 2010. That is the slowest quarterly growth in two years, and 3.2 percent slower than the previous quarter's 9.3 percent growth (as compared to the year-ago third quarter).

But the growth, as marginal as it was, was driven by smartphones. In the press release, the company did not break out smartphone versus feature phone numbers. The quotes in the release, though, left no doubt that smartphones were a saving grace. It is summed up by this quote from Senior Research Analyst Kevin Restivo:

The introduction of high-growth products such as the iPhone 4S, which shipped in the fourth quarter, bolstered smartphone growth. Yet overall market growth fell to its lowest point since 3Q09 when the global economic recession was in full bloom.

Thus, the dynamic is clear: The limited growth in the cell phone category was driven by smartphones, though they still represent less than half of the overall category.

There is a great deal of material available on the relative strengths of the various smartphone vendors. What seems to be a clear analysis is described by Tiernan Ray at Barron's. He describes a long study by USB's Maynard Um that suggests that there are two groups: Apple and Samsung, which are thriving on one hand, and the rest - users of other operating systems and Android proponents besides Samsung - are struggling. Um also sees the weakness of feature phones, but suggests that the lower volume of devices still will produce greater revenue.

The bottom line, beyond any specific comparison, is that smartphones are thriving. While their passing of PCs should be noted, it should be in the context of the growing importance and popularity of smartphones, not whether or not they are replacing the desktop machines.

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