There doesn’t seem to be any question about which sector of the cellular business is hot right now. Handset sales are down overall because of the poor economy, but the high-end handset category is growing significantly. Here’s a look at some of the key figures and trends from the various research firms covering the mobile-phone area.

• ABI Research (www.abiresearch.com) projects that worldwide handset shipments will decrease by 8.1% in 2009 to a level of 1.1 billion. Further, the company has documented the fact that smart phones are proving to be the “engines of growth” for this sector.
• Research firm iSuppli (www.isuppli.com) confirms these figures, saying that after eight consecutive years of annual shipment growth for cell phones, 2009 will show a contraction due to the declining disposable income during the current downturn. 2009 shipments should be 1.1 billion, down from 1.23 billion in 2008. The company further projects that the handset decline has bottomed out and growth will return for the remainder of the year and in 2010. Global shipments grew by 4.7% in the second quarter compared to the first quarter thanks to growth in the Middle East and Latin America.
• Future Horizons (www.futurehorizons.com) predicts mobile-phone recovery in 2010. Most of the growth is expected to come from the emerging markets in Brazil, Russia, India, and China. There is also a healthy replacement market in the saturated regions of the U.S., Western Europe, and Japan.
• IMS Research (www.imsresearch.com) forecasts that while other segments of the handset market will decline by 7.7% to 1.09 billion phones, the smart-phone expansion will account for 16.2% of new handset sales. IMS further expects the smart-phone segment to grow from 13% now to 38% of total handset sales over the next five years. New models from Apple, Palm, Samsung, LG, and HTC are expected to lead the way.
• Research firm Ovum (www.ovum.com) also projects great things for smart phones. Ovum estimates that smart-phone shipments will grow by 23% from 2008 to 2009. The company also projects a compound annual growth rate (CAGR) of 19.5% through 2014, at which time smart phones should account for 29% of the total handset market. Ovum additionally confirms the 9.1% decline in handset sales in 2009 but estimates smart-phone growth of 18.7% over the same period.
• The top five handset providers—Nokia, Samsung, LG, Motorola, and Sony Ericsson—have retained their relative market positions according to IDC and Strategy Analytics.
• Other than Nokia, the top smart-phone manufacturers like Apple and RIM aren’t among the top five overall handset providers. However, new models from Samsung and LG are expected to quickly make them key smart-phone players.

The factors driving this smart-phone rush include the increased desire for Internet access with 3G data services and the blizzard of new applications. Virtually all the major players now have applications stores to sell third-party software for the various phones. Apple is the leader, with well over 1 billion sold. The other vendors are also doing well with significant growth expected. Hot features like GPS and Wi-Fi also are driving the increase. Ovum recently tracked data confirming that most high-end phones have GPS (77%) and Wi-Fi (67%).

Continuing Parade of New Smart Phones

There also has been a slew of new smart-phone announcements. Apple recently launched its 3GS model and reduced the price of its second-generation iPhone 3G to $99. The 3GS has a faster processor, supports UMTS/HSPA to 7.2-Mbit/s downloads, and has a built-in compass.

Palm also introduced its Pre model through Sprint Nextel. It has all the usual smart-phone bells and whistles, including a slide format with both a touchscreen and conventional keyboard. It uses Palm’s webOS, which makes it easier to multitask and switch between apps.

RIM is holding its own with its popular BlackBerry series, and Nokia has its new N97 and is rushing to roll out other high-end models. Then there are the new handsets from Samsung and LG. HTC also is offering its new G2 Android model, the myTouch 3G, through T-Mobile.

RIM and Apple currently rule the smart-phone category. Microsoft Mobile OS phones are in third place, with Android phones next. Palm is expected to capture some of the smart-phone market share, and that will happen as the pie grows bigger.

When it comes to business smart phones, RIM is the clear leader with Microsoft OS phones second. Apple is not big in the business phone sector yet, but its new phones are better than ever and offer the security and features that enterprise customers want. Palm has always been a player in the business sector, so it should do well.

Apps and OSs Matter

With all the apps stores and the third-party software wave, software companies are beginning to wonder which phones to target. And that has to do with the operating system (OS). Software developed for one system cannot run on another, and duplicate efforts are needed to serve more than one phone. Nokia is the world leader with its Symbian OS and 58% of the market or so as of the first of the year. RIM’s OS is second with Microsoft Mobile OS in third. But things are changing.

Apple is huge and its apps sell well, but they are more consumer than business. Android and other Linux-based OSs are coming on strong with more vendors choosing them every day. Motorola’s forthcoming smart phones are said to use Google’s Android, and many other companies like HTC, LG, and Samsung also use it or are planning phones around it. Rumor is that Dell has an Android phone for China. In any case, determining where the development effort should go is a key decision. Some attempts are being made to make the apps run on Java or Flash, making the OS less of a factor, but one cannot completely dismiss the OS differences.

Anyway, the OS matters. And at this stage of the smart-phone market, it is hard to tell who the big winners will be. Right now, bet on RIM for business and Apple for consumer. But watch for Nokia’s continued major presence. Think Nokia with Microsoft.

Decisions, Decisions

My current cell-phone contract with AT&T is just about to come to an end, and I’m shopping for a new smart phone. My original iPhone has done well and I love it except for two things.

First, I hate the touch keyboard. After nearly two years of practice with it, I still make lots of mistakes. It’s irritating as it takes agonizing patience to type a message or answer an e-mail. The problem is apparently just me, as most other users are okay with it.

Then, there’s the slow EDGE downloads of e-mail and Internet access. The new 3G models take care of this problem with WCDMA or HSPA. I don’t use the Wi-Fi connection, although it works fine.

The Google Maps option also works well, but I will seek real GPS and navigation in my next phone. I do use the iPod feature, though. The other features are great, and there is no end to the number of apps available. The iPhone proved to me that the new smart phones are almost a laptop replacement. For short trips, as long as I can deal with the e-mail and messages, I’m good.

I’m seriously looking at the newest iPhone and the Palm Pre. The Pre is great, but since it’s a cdma2000 phone, I probably won’t go for it as I still want GSM/EDGE/WCDMA/HSPA compatibility that works in Europe. I suspect that Palm will eventually get around to a GSM/UMTS 3G version.

For now, however, that means that I could go for a BlackBerry Bold or Storm. I tried the Samsung Blackjack and did not like the Microsoft OS. The standard keyboard was great, though. I would really like to see the TV option, but it isn’t widely available. Maybe two years from now when I renew again, there will be more choices. Some interesting things are yet to come.