Dubai : Despite declining mobile handsets sales in 2009, smartphones continue to represent the fastest growing and most profitable segment of the mobile handset market.

Informa Telecoms & Media forecasts that sales of these devices are to grow by 41.7 per cent year-on-year in 2010 from 6 million to 8.5 million units in 2010 while the value growth will not exceed 12 per cent because of the sharp decline of the smartphones average selling price.

Sales of non-smartphones in the region has declined 2.7 per cent in 2009 to reach 40.2 million units while sales of these phones is expected to further decline to 39 million units in 2010 mainly because of the cannibalisation by the smartphone segment, driven by the continued migration of subscribers to higher generation networks and advanced data services.

Total handset sales in 2010 are expected to rise by 3.01 per cent to 47.5 million compared to 46.11 million last year. This figure is expected to touch 59.63 million by 2014.

"However, the importance of the smartphone segment is underlined by the fact that the number of smartphones sold in the region in 2009 accounted for 13 per cent of the total handsets sales and it is expected to reach 18 per cent in 2010, Malek Kamal Sa'adi, Principal Analyst - Cross Portfolio, Informa Telecoms, said in an interview to Gulf News.

He said the strong volume growth rate and high smartphones average selling prices make this the most profitable segment in the current mobile phone market. As demand for mid-tier handsets declines, competition in the smartphone segment is set to intensify which is forcing manufacturers to innovate and differentiate their products in terms of hardware, software and content.

According to Sanjay Kachroo, Director, Acer M.E. Ltd., smartphones have brought a number of functionalities that were constrained previously to the PC or notebook world. TV is one very successful 3G service that benefits from smartphones' capabilities. Blogging (pictures and text), all social networking applications are as well services that got deployed on smartphones in an easy and attractive way and that contributed to the smartphones success.

Functionalities

Finally, both a proper web access on large smartphone screens, as well as the touch experience available on such devices has played an enormous role in the smartphone growth. The next steps are certainly going to lead us in a more collaborative experience which will be facilitated by smartphones capabilities like mobile TV ,video-on-demand and video conferencing.

Attracted by the high volume growth and strong profit margins, many new entrants have entered or are entering the market. Volume market leaders are being challenged by RIM, Apple, HTC and Palm who are significantly eroding their market share in the smartphone market.

Kachroo said more and more vendors will focus on this segment this year. Already there are research organisations that put the figure of smartphones to be 35-40 per cent higher than the laptops and growth will be much higher than laptops and mobile phones.

"Volume market leaders have responded with a multitude of me-too iPhones, offering multi-touch and an enhanced internet experience but true innovation is still lacking from many incumbent OEMs' [original equipment manufacturers'] portfolios. However, under the pressure of competition some incumbents such as Nokia and Microsoft are now revamping the architecture of their OSs to keep pace with innovation."

Saadi expects Microsoft to be the leading player in the high-end smartphone OS segment due to the strong distribution channels of Microsoft windows mobile phones in the region. Symbian is expected to dominate the low-end segment of the smartphone market.

"We expect Microsoft, Symbian and Apple to be the leading players in the region in 2010 but RIM and Android could also gain significant market share. We still have no visibility on the performance of Android in the region but we do not expect Android to gain a significant momentum anytime in 2010," Saadi said.

Kachroo said it looks like by 2012 Android OS will overtake Microsoft as the leader due to two reasons; licensing fee could be one major challenge; Microsoft does not have an application store while Google has.

"The oligopoly market dominated by Apple and Blackberry will be diversified due to OS diversification by Microsoft and Google. Also other device vendors will pour out various products and expand their consumer base from business users to young generations," Y.M. Gong, Product & Strategy Director for MEA Mobile Communications, LG Electronics, said.