By guest author Nalini Kumar Muppala
The year 2010 promises to be an exciting year for smartphones, but it is easy to get carried away by all the talk about their power and capability. It is time to take a reality check.
Not every player has had it easy competing in the smartphone market. For example, Palm and Garmin are struggling to find their foothold. 2010 will determine the fate of many wannabes.
Further, devices are a fraction of the total mobile ecosystem. As mentioned earlier, handset sales accounted for a mere $160 billion out of $1,070 billion in mobile industry revenues in 2009. Further, smartphones are just a fraction of the handsets sold. SMS and MMS revenue alone was $153 billion in 2009.
Smartphones let carriers sell lucrative data services to customers. Many feature phones can be used to serve TV, music, the Web, and so forth. In 2009, a mere 13% of the installed base was smartphones. In contrast, 80% of the entire installed base of phones is MMS capable, 53% of these phones are Java/BREW capable, and 91% are 2.5G data capable or better (source: Tomi Ahonen). This is a much bigger addressable market. Customers who do not own a smartphone would be willing to shell out some money to get useful data services, and the world is not going to be flooded with smartphones any time soon. There is money to be made by serving lesser devices, which are in abundance.
Qualcomm is pushing to expand support for its FLO TV on mobile phones. Those who have traveled to South Korea or Japan will have noticed the prevalence of mobile TV in those countries. Qualcomm said that it will bid in the upcoming wireless broadband spectrum auction in India. The stated reason is to expand its TD-LTE standard. I expect Qualcomm to push its FLO TV and similar services.
For much of the emerging world, a mobile phone is the only communication device that a person may have. It will be a long time before smartphones are affordable to this “base-of-pyramid” consumer. In the meantime, device and chip makers can help to improve the capability of the devices that this group can afford, and service providers can innovate and build on economies of scale.
This concludes this series. Thanks for reading.