Smartphone Market Growth Bubble Driven By Apple, BlackBerry And HTC

“The market is exploding,” ABI senior analyst Michael Morgan wrote, adding that, while 10 percent growth could be considered “very good” quarter-on-quarter growth in today’s market, such a figure would normally be chalked up as “lacklustre”.

Smartphone Subsidies Driving Growth

Helping to drive such “remarkable” growth rates are the low prices of handsets, said Morgan, which have are now often heavily subsidised. The question being asked, he said, is whether such a market structure can be sustained.

The answer? “Most observers say ‘no’,” Morgan continued. “It needs to boil down to three or perhaps four key operating systems.”

Apple, with its iPhones running iOS, shipped 8.4 million units during the second quarter (approximately three million of which were the iPhone 4), resulting in a quarter-on-quarter growth of 68 percent, according to ABI’s figures.

Taiwan-based HTC, which has filled its mobile portfolio with Android smartphones, also saw shipments grow during the quarter, from 3.3 million to 5.3 million handsets. And RIM, which launched its newest OS, BlackBerry 6 – not to mention the QNX-based BlackBerry Tablet OS on its PlayBook tablet – saw shipments grow from 10.5 million to 11.2 million, a figure expected to climb more significantly in future quarters. “RIM hasn’t seen the full benefit of its OS launch yet,” Morgan explained.

Additionally, Hewlett-Packard, which purchased Palm this summer, will soon begin offering smartphones running the Palm-created WebOS, while Intel and Nokia are working on handsets running MeeGo – an OS created from a mix of Nokia’s Maemo and Intel’s Moblin. Finally, Samsung, while investing heavily in Android, has also introduced Wave and Wave II smartphones, which run its proprietary Bada open-source platform.

In subsidised smartphone markets, a final barrier to adoption is now the cost of data plans, said Morgan.

In the US, executives at Verizon Wireless confirmed that, like rival AT&T, it will soon begin offering tiered pricing for its data plans, including a $15 option that it expects will attract first-time smartphone users. Unlike AT&T, however, which recently ended its offer of an unlimited plan, Verizon still plans to offer an “all-you-can-eat” option. This option, suggests the ABI report, may also be contributing to the unsustainable nature of the current smartphone market.

The “huge numbers of smartphones now connected in US, particularly those running iOS and Android”, states the report, are creating capacity concerns which are “sucking the value out” of the mobile ecosystem, said Morgan.