Who will be right on the smartphone makers? On the bearish side are analysts like breakingviews.com columnist Robert Cyran, who asks: “Can every smartphone maker be better than average?” On the bullish side are analysts like IDC Canada wireless-communications specialist Kevin Restivo, who is quoted as saying there
is room for multiple players in the market – a rising tide lifts all ships.
Smartphones, of course, are cellphones with software operating systems that allow them to increasingly function like personal computers. That is, they can do tasks such as web browsing, downloading of movies/music, and sending email (and getting better with each upgrade to handsets and networks).
Cyran thinks the below-expectations Q2 report from Research in Motion (RIMM) signals more disappointments ahead for the sector. RIM, Apple (AAPL), and Palm (PALM) recently cut prices on their smartphone offerings, “which could indicate an increasingly tough fight to attract customers – indeed, RIM lowered its gross margin forecast for next quarter,” he writes. And competition is only going to intensify as new models from Motorola (MOT) and Taiwan’s HTC hit the market. Nokia (NOK) is also a smartphone entrant.
Restivo, however, thinks it may be premature to worry about one company being better than the other. The market is taking off and there is room for many smartphone providers to enjoy strong rates of growth, in his opinion. The shake-out is some ways off, considering (among other things):
- The mid-August research report of RBC Dominion Securities analyst Mike Abramsky described the smartphone market as: “huge, nascent and under-penetrated” and declared the shift to smartphones was “the next wave of computing ….profound as the historic technology shift from mainframes to PCs,”
- Smartphone penetration of the global handset market will rise over the next three years from the current 15% to 35%, and 2011 smartphone sales will surpass shipments of personal computers (400 million a year), Abramsky expects,
- Sales of smartphones climbed 27% in the second quarter of 2009 (over the same quarter a year ago), according to Gartner Research – a respectable growth rate considering it occurred during one of the worse economic downturns in decades.