Smartphone Growth - a Beacon in a Gloomy Technology Market

After many years of constant growth, the global electronic goods market will decline by over 2% in 2009 compared to 2008, reaching US$681 billion. Growth in value terms centres around four markets in 2009: LCD TVs, Laptops and HD DVD players (Blu Ray) and smartphones. This situation has dramatically changed compared to 2008, when more than ten products were driving the market.

It would appear that we are at the end of a cycle of innovation which had brought a multitude of new technologies; particularly Portable Navigation Devices (-15% in 2009 compared to 2008 in value), Multimedia Players (-11%) and Digital Cameras (-11%).

The total mobile phone market is in decline; a forecasted global market of just over 1.1 billion will see a year on year decline for the first time ever as volume contracts by around 5%. GfK forecasts that the market will return to growth by Q2 2010, although an annualised growth for the whole of 2010 is unlikely.

Growth is evident at both the top and bottom ends of the device market as the market has become increasingly polarised.  On one hand there is the demand for cheaper prepay phones or short-term contracts.  Consumers who use their handsets purely for communicating by phone or text favour slim-line functional mobiles.

On the other there is consumer demand for a more sophisticated handset (as seen with the shift towards 3G).  Open Operating Systems, touch screen facilities and high speed up and downloading capabilities becoming increasingly popular. 

Smartphones now account for 11% of the global mobile phones market; a 2% increase over last year which is a phenomenal achievement. The development has been strongest in Scandinavia (Norway 22% of the market represented by Smartphones in 2008 and Finland 27%), and the Middle East (Saudi Arabia 28% and UAE 23%). The UK stands at 18% but this is dwarfed by Hong Kong where close to a third of all phones sold are smartphones.

This segment is driven by new phones to market with close to a quarter of all sales in Europe coming from devices launched in 2009. These newer, faster and easier to use phones are driving behaviour and sales.

2009 has been the year of the touchscreen as it has grown from only 5% of the European market in 2008 to 14%. However, this is not universal. Some countries such as France and the UK are closer to 25% of all phones sold. This Christmas there are over 100 touchscreen devices for UK consumers to choose from across the range of price points and subscriptions.

The technology and the device are central to consumption and additional ARPU. Touchscreen phones generate three times more downloading, streaming and browsing than all other devices. In addition 3G phones account for over 85% of all traffic. Contract customers account for 91% of downloads, although prepay is growing faster.

The internet as a method of purchase is also on the up, mirroring the trends in other consumer technology markets. In the UK over 15% of all devices are bought online. This is not purely a contract phone phenomenon as this Christmas, one in ten prepay phones will be purchased online.

The technology in our hands will increase by looking to the east (which is a great barometer for the European market) in 12-18 months time we can see signs that the applications and technology we will be using on our phones in 2010 will expand further.

In Japan biometrics, NFC and GPS are all booming. This means face or finger print recognition will become more prevalent soon. NFC enables mobile money and micropayments to flourish, much has been made of this for the future but at the moment the industry is still in its infancy in most markets.  We have also seen the growth of dual SIM mainly in relatively less developed markets (10% of china market and 15% in Nigeria) but it is something which could find its way to Europe soon.

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GfK Participation in Panel Discussion

• Date: Tuesday 16th February
• Time: 14.00-15.30
• Topic: The Internet Everywhere: 'It's time to Adopt a Smart Pricing and Segmentation Strategy'

In this session GfK's Aaron Rattue will participate as the moderator of a panel discussion and present his views on Mobile Data Segmentation and Pricing Strategies.

Together with our technology partners Qosmos, GfK Retail and Technology will also be promoting our Network Intelligence Solution (NIS) at this year's Congress, please stop by the GfK booth (Hall 7, 7E58) to find out more about this exciting new service and to see how this can help your business needs. Or contact us to book a meeting with a GfK market expert.

For further information on GfK's participation at MWC 2010 visit GfK at 2010 GSMA Mobile World Congress.