Handset shipments will jump some 29 percent from 1.7 billion in 2012 to 2.2 billion in 2016, according to a new study. ABI Research (News - Alert) said the demand for smartphones in particular could lead to a shift in production over other offerings.

Smartphones are projected to be so popular in the sector that they will be larger than low cost, extra low-cost, and feature phone segments combined by 2016, the study added.

ABI says that non-smartphone shipments will increase 1.08 billion in 2012 to 1.09 billion in 2016. On the other hand, smartphone shipments will jump from 643 million to 1.1 billion over the same years.

Given this demand, Original Equipment Manufacturers (OEMs) will shift production to smartphones from low cost offerings, ABI suggests. In addition, given the current market, the smartphones they will provide will need to be competitive in price compared to low-cost handsets.

“This emerging scenario could become a very dangerous situation for Nokia’s (News - Alert) handset business as the smartphone and feature phone segments will not be able to support each other in trying times,” Kevin Burden, vice president and practice director, mobile devices, ABI, said in a statement.

According to the study, Low-cost smartphones are predicted to increase from 45 million shipments in 2012 to 170 million in 2016.

“The writing is on the wall. Either you have a successful smartphone strategy or you will have to steal market share to grow,” Michael Morgan, senior analyst, mobile devices, at ABI, said in a statement.

Two examples of OEMs which are shifting to smartphones from low-cost phones are: Huawei and ZTE (News - Alert), ABI said.

ABI Research’s new report, “Mobile Device Shipment Market Data,” discusses market share, vendor ASPs, and handset shipments. Data is offered by region, technology, and operating system. Also analyzed are such features as: Bluetooth, Wi-Fi, color displays, cameras, GPS, and PTT. The study is part of the firm’s Smartphones & Mobile Devices Research Service.

In a related topic, TMCnet recently reported that China uses more smartphones than any other country. Strategy Analytics (News - Alert) reported that China took top place during the 3Q of 2011. Shipments of smartphones increased 58 percent during the 3Q in China – compared to 24 million units in the prior quarter, according to the report last November.