Handset market likely to grow 13% this year

The cellphone market will rebound more strongly than expected this year as improving economies boost spending on new gadgets and handset vendors push cheap smartphones, research firm Gartner said.

The market fell one per cent in 2009, the first decline in eight years as consumers cut spending amid recession.

But Gartner analyst Carolina Milanesi said she now expects the market to grow 11-13 per cent this year, compared with the firm's December forecast for a nine per cent increase.

"The economy seems to be stabilising more into a recovery trend than we forecast back in December," Milanesi said. "Sales will return to low-double-digit growth, but competition will continue to put a strain on vendors' margins."

Gartner is more optimistic than the top cellphone maker Nokia, which has forecast growth around 10 per cent, and also slightly ahead of analysts consensus of 11 per cent in a Reuters poll this month. Gartner sees smartphone market volume growing a whopping 46 per cent from 172.4 million sold last year, boosted by cheaper models. The most affordable now cost just more than $100 (Dh367) excluding operator subsidies.

Gartner said it expects average sale prices in 2010 to fall more slowly than last year – when intense competition hurt pricing in markets such as China and India – helped by an improving economy and consumers upgrading to cheap smartphones. Industry leader Nokia saw its market share slip last year to 36.4 per cent from 38.6 per cent a year before, and the research firm said more challenges lay ahead.

"Nokia will face a tough first half of 2010 as improvements to Symbian and new products based on the Meego platform will not reach the market before the second half of 2010," Milanesi said. "Its very strong mid-tier portfolio will help it hold market share, but its ongoing weakness at the high end of the portfolio will hurt its share of market value," she said.

Korean vendors Samsung Electronics and LG Electronics gained handset market share last year, up to 19.5 per cent and 10.1 per cent respectively. BlackBerry-maker Research in Motion and Apple controlled 19.9 per cent and 14.4 per cent of the smartphone market in 2010, but both lost some share in the fourth quarter to phones with Google's Android software.

All vendors in total sold 6.8 million Android phones last year, giving it a 3.9 per cent share of the smartphone market, compared with just 0.5 per cent a year before.

Gartner said Android's success should continue into 2010 as more manufacturers launch Android phones, but noted some manufacturers have expressed growing concern about Google's intentions in the mobile market.

If such concerns cause manufacturers to change their product strategies or operators to change which devices they stock, this might hinder Android's growth in 2010, Gartner said.

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