Smartphones bouncing back from economic woes

Unit shipments grew 67 percent worldwide in the first quarter, according to research company Canalys

Smartphone shipments have recovered strongly from a slump during the economic downturn, with Nokia delivering the most units but Motorola showing the greatest gains among top vendors, research company Canalys said Monday.

There were 55.2 million smartphones shipped worldwide in the first quarter of 2010, up 67 percent from a year earlier, according to Canalys. It was the steepest increase since the end of 2007 and represented an accelerating recovery from an economic slump that held growth to single digits for most of 2009. Though the high-end, data-capable handsets fared better than the overall mobile-phone market in that period, the trend was a jolt for a hot new class of products.

The sales slowdown was caused in large part by weaknesses in the global economy, but also by other factors, including delayed introductions of key products, said Canalys analyst Chris Jones. The recent upswing came in part from strong shipments in countries where mobile technology is being adopted rapidly, such as China and India, he said.

But falling prices, increasing acceptance for corporate use, and the growing selection of applications available in various app stores all are helping to boost the market for smartphones around the world, Jones said. Carriers are helping the trend along because the more capable phones encourage the kinds of mobile activities, such as multimedia and social networking, that help them sell lucrative services.

"There seems to be no stopping the market now," Jones said.

Nokia continued to lead in shipment volume, partly by tapping into growth in India and China. The Finnish company has cultivated both markets for years by building up its brand with a wide variety of phones, Jones said. It delivered 21.4 million smartphones in the first quarter, up about 57 percent from a year earlier.

Though little known as a smartphone vendor in North America, Nokia is a strong player across the rest of the world with touch-screen models such as the 5230, 5800 and 5530. Nokia sells nearly as many units in Asia as in the Europe, Middle East and Africa region, Jones said, and its greatest gains are coming in Latin America. But in North America, where it holds just 3.5 percent of the market, Jones sees no signs that Nokia is about to make significant gains.

Worldwide, Nokia held about 39 percent of the smartphone market, down from about 41 percent a year earlier. Research in Motion remained its closest rival, with just over 19 percent. Apple gained ground on both, its share growing to nearly 16 percent from just 11.5 percent a year earlier. Apple was helped by the expiration of exclusive carrier deals in some countries. Taiwan-based HTC, which makes several popular Android phones, was the fourth-biggest smartphone maker.

But Motorola showed the strongest gains in the quarter, with its worldwide shipments increasing almost 137 percent to 2.6 million. Its share of the market increased to 4.7 percent from 3.3 percent.

"That's quite a decent shift in market share for Motorola," Jones said. "It's looking pretty good for Motorola right now as they re-establish their brand in the market."

The ailing wireless pioneer, now in the midst of a reorganization, is making a comeback by focusing on Google's Android operating system, Jones said. For example, the Android-based Droid has become an important product for Verizon Wireless, which is heavily marketing it against rival AT&T's Apple iPhone.

Palm, which just agreed to be acquired by Hewlett-Packard, has been slowly gaining market share since the introduction of its WebOS platform last year, but it still holds only a 1.6 percent share worldwide, Jones said. The acquisition may help Palm gain ground by breaking into more markets outside North America, he said.

Touch screens have taken over the smartphone market, making up 59 percent of all the devices shipped in the fourth quarter, compared with just 34 percent a year earlier, according to Canalys. Devices that use keyboards held fairly steady at 27 percent, while less than 14 percent of smartphones now rely on a cell-phone keypad.

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