Smartphones:Voice,Information and Entertainment
By Sam Subramanian
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| Smartphones |
Investments
in shares of wireless technology companies and wireless service providers have
been particularly profitable in the post-dot com era. The wireless industry is
in a sweet spot of the technology space. Bountiful business opportunities exist
as wireless usage continues to increase in both developed and emerging markets.
And driving this usage higher are new products such as smartphones whose
capabilities are being augmented by the deployment of third generation (3G)
wireless networks.
Feature-Rich
Smartphones.
Smartphones
are more than mobile phones. A smartphone is a mobile phone with built-in
functions of a personal digital assistant. Smartphones pack a diverse range of
features and functionalities into the handset that makes them a mobile information
center and entertainment device for the user.
Smartphones
commonly include features such as web browsing, e-mail, and multimedia
capabilities. Certain models have enough horse power to run complex software
applications such as enterprise customer relationship software and car
navigation programs.
A
full-featured QWERTY-type keyboard, MP3 player, and Geo Positioning Systems
capability are becoming common among higher-end smartphones. Instant messaging
is a cool feature making its way into the mainstream.
Smartphones,
A Growing Segment of the Handset Market.
Smartphones
represent a small, yet rapidly growing, segment of the handset market.
According to Strategy Analytics, smartphone sales at 17.5 million units in 2004
accounted for 3% of the worldwide sales of 684 million handsets. However, this
represents a significant jump from the 8.2 million units sold in 2003.
The demand
for smartphones is projected to grow rapidly in the coming years. By 2009, the
number of smartphone units sold is estimated to reach 125 million or 16% of
total handset sales worldwide. This implies a 48% compound annual growth rate
in smartphone unit shipments over the 2004-2009 period.
Smartphone
Early Adoption Led by Asia and Europe.
Adoption
of smartphones has been particularly rapid in Asia and Europe. The aggressive
deployment of advanced wireless networks in these regions has encouraged early
adoption of smartphones.
The Asia
Pacific region currently accounts for about 37% of global smartphone sales with
South Korea and Japan being leaders in smartphone usage. The European market
accounts for 27% of global smartphone sales. Analysts expect smartphone sales
in Europe to exceed sales in the Asian market in the coming years. North
America's market share in smartphone sales was expected to reach 25% by the end
of 2004.
Nokia, the
800 lb. Gorilla of Smartphones. Nokia
(NYSE: NOK) is by far the dominant global smartphone manufacturer. The Finnish
company is currently estimated to command half to two-thirds share of the
global smartphone market. Nokia
recently introduced its feature-rich Nokia 7710 smartphone in Europe and
Africa.
The wide-screen Nokia 7710 smartphone includes a full Internet browser,
an integrated music player, a camera with 2x digital zoom, and a FM radio. One
of the nifty features of the Nokia 7710 smartphone is its ability to make
weblogging mobile. Users can post pictures and text from the Nokia 7710
smartphone directly to the web through the 'moblog' client.
Nokia is
also expected to introduce the Nokia 3230 smartphone in the first quarter of
2005. The Nokia 3230 smartphone features a video recorder and 'Movie Director'
that will allow 1 hour of video to be captured.
Nokia is
now increasingly looking at software licensing deals to help differentiate
itself from its competitors. Nokia has recently signed licensing deals with
Macromedia and RealNetworks. Nokia is also said to be working on handsets that
will receive wireless television feeds.
Smartphone
Investment Implications.
The
increasing adoption of smartphones augurs well not only for Nokia but also for
other smartphone manufacturers like palmOne (Nasdaq: PLMO) and Research In
Motion (Nasdaq: RIMM). palmOne recently introduced the GSM edition of its Treo
650 smartphone. Research in Motion recently released the latest model in its
BlackBerry 7100 series, the 7100g.
The
incorporation of additional features and functionalities that make smartphones
the portable information center and entertainment device of choice has bullish
implications beyond just manufacturers of smartphones. Wireless
service providers like Vodafone (NYSE: VOD) should see their average revenue
per user being buffeted with increasing use of value-added services that
smartphones enable. Then too,
the increasing adoption and usage of smartphones will require the rollout of 3G
wireless networks in earnest, translating into business opportunities for
wireless network equipment providers such as Ericsson (Nasdaq: ERICY).
Via Ezinearticle
