Handset market rebounding in 2010: Gartner

Handset market rebounding in 2010: Gartner

Helsinki: The cellphone market will rebound more strongly strongly than expected this year as improving economies boost spending on new gadgets and handset vendors push cheap smartphones, research firm Gartner said on Tuesday.

The market fell 1% in 2009, the first decline in eight years as consumers cut spending amid recession.

But Gartner analyst Carolina Milanesi said that she now expects the market to grow 11-13% this year, compared with the firm’s December forecast for a 9% increase.

“The economy seems to be stabilising more into a recovery trend than we forecast back in December," Milanesi said.

“Sales will return to low-double-digit growth, but competition will continue to put a strain on vendors’ margins," she said.

Gartner is more optimistic than the top cellphone maker Nokia, which has forecast growth around 10%, and also slightly ahead of analysts consensus of 11% in a Reuters poll this month. Gartner sees smartphone market volume growing a whopping 46% from 172.4 million sold last year, boosted by cheaper models. The most affordable now cost just over $100 excluding operator subsidies.

Gartner said that it expects average sale prices in 2010 to fall more slowly than last year—when intense competition hurt pricing in markets such as China and India—helped by an improving economy and consumers upgrading to cheap smartphones.

Nokia H1 tough

Industry leader Nokia saw its market share slip last year to 36.4% from 38.6% a year before, and the research firm said more challenges lay ahead.

“Nokia will face a tough first half of 2010 as improvements to Symbian and new products based on the Meego platform will not reach the market before the second half of 2010," Milanesi said.

“Its very strong mid-tier portfolio will help it hold market share, but its ongoing weakness at the high end of the portfolio will hurt its share of market value," she said.

Korean vendors Samsung Electronics and LG Electronics gained handset market share last year, up to 19.5% and 10.1% respectively.

Android gaining

BlackBerry-maker Research in Motion and Apple controlled 19.9% and 14.4% of the smartphone market in 2010, but both lost some share in the fourth quarter to phones with Google’s Android software.

All vendors in total sold 6.8 million Android phones last year, giving it a 3.9% share of the smartphone market, compared with just 0.5% a year before.

Gartner said that Android’s success should continue into 2010 as more manufacturers launch Android phones, but noted some manufacturers have expressed growing concern about Google’s intentions in the mobile market.

If such concerns cause manufacturers to change their product strategies or operators to change which devices they stock, this might hinder Android’s growth in 2010, Gartner said.