Report: Led by Open Source Platforms, Smartphones to Accelerate out of Recession

Smartphones are emerging as an increasingly popular choice among users of mobile devices, and will double their share of the entire cell phone market by 2013, a Scottsdale, Arizona-based market research firm is predicting today.

 

Officials at In-Stat (News - Alert) say that worldwide smartphone sales will remain strong in 2009 – in some ways, a nod to the power of mobile solutions to weather this recession – and especially strong in the United States.

 

According to Frank Dickson, vice president of the firm’s mobile Internet group, strong demand is being driven by device manufacturers leveraging open OS device to re-invent the mobile phone experience.

 

“New and prospective smartphone buyers are drawn to new mobile applications, even though the median number of applications downloaded for all platforms, including the Apple (News - Alert) iPhone, is relatively modest – below five applications per user for each platform,” Dickson said.

 

Those applications appear to drawing buyers.

 

As TMCnet reported last week, though the world’s largest maker of cell phones is shuttering plants and laying off thousands of workers as it faces weak consumer demand in this recession, smartphone users appear to be spending money on applications.

 

According to a new survey from ABI Research, 16.5 percent of U.S. smartphone users who installed applications on their devices spent between $100 and $499.

 

ABI Senior Analyst Jeff Orr says the level of spending is especially significant given the low cost of most mobile applications, ranging from as little as a dollar or two at Apple’s iPhone (News - Alert) App Store, to – at most – about $25.

 

“Apple is seen by some as hurting the market with its iPhone App Store,” Orr said. “It drives the price of content down to $1 to $2, using a model similar to its successful iTunes music store. If you exclude Apple from the mix, applications for other platforms cost about $7 to $25 each.”

 

The firm surveyed 235 U.S. smartphone owners who had installed applications for its study, “Mobile Application Storefronts.”

 

A lot of developers face a catch-22, ABI says, when it comes to producing applications. While iPhone has a visible store and popular device, iPhone sells applications at a very low price, of which the developer gets about 70 percent. Other storefronts don’t sell as many applications, but developers can earn more per transaction.

 

According to Orr, Apple did a lot for the market with its massive marketing effort telling the public how great mobile content is.

 

“That created a ‘halo’ effect for the rest of the industry: other device manufacturers and content developers working on non-Apple platforms all saw a bump in sales and downloads because there’s more awareness of the smartphone category,” Orr said. “In 2009 a number of new mobile application storefronts will be launched from Nokia, Palm, RIM and Samsung.”

 

Those companies increasingly are eyeing the cloud as, here on Earth, the recession takes hold and cell phone makers are facing a down year in 2009.

 

One hang-up for mobile device users appears to be smartphone security, according to In-Stat, especially for employers with mobile workers.

 

Even so, nearly one third of survey respondents plan to obtain a smartphone the next time they upgrade their current phone, the firm reports.

 

“Smartphones with Linux OS, including Android, will see the highest growth and the second highest volume behind Symbian (News - Alert). Linux OS will outpace Windows Mobile, RIM and iPhone OSX,” according to In-Stat’s $3,500 report, titled, “Smartphones: Heading to the Mainstream.”