Affordable Smartphones Boost Global Handset Sales

Sales of global handsets set a record in the fourth quarter with 17.9 percent growth. Affordable smartphones helped drive the market, and IDC thinks they will continue to lead the handset market through 2014. For the quarter, Apple's iPhone sales jumped 86.2 percent from a year ago. Chinese handset maker ZTE rose to number 4 in the market.

IDC said Friday that the global handset market grew 17.9 percent to a record quarterly shipment of 401.4 million units in the fourth quarter. Moreover, handset vendors delivered 1.39 billion handsets in all of 2010 -- an 18.5 percent increase over the previous year.
The availability of a wider array of advanced smartphones at affordable prices helped drive the overall market to its highest growth rate since 2006, when cell-phone shipments increased 22.6 percent. Looking ahead, IDC believes growth in the mobile -phone market will continue to be driven largely by smartphones through the end of 2014.
"Feature-phone users looking to do more with their devices will flock to smartphones in the years to come," predicted IDC Senior Research Analyst David Restivo. "This trend will help drive the smartphone submarket to grow 43.7 percent year over year in 2011."
Apple's Robust Quarter
Apple racked up a phenomenal 86.2 percent year-over-year growth on a global basis in the final three months of 2010. According to IDC, the iPhone sold particularly well in North America and Western Europe, and Apple said it could have sold even more had it been able to make more handsets.
Both Apple and Research In Motion maintained robust sales in the U.S. market despite facing new smartphone competition from Dell, Huawei, Kyocera and Sanyo. Moreover, Apple is almost certain to continue building a commanding market position in the quarter currently under way due to next month's iPhone 4 launch at Verizon Wireless.
AT&T has clearly been worried about the prospect that some of its iPhone subscribers will migrate to Verizon's network. Apple, however, only stands to gain since current AT&T subscribers would have to purchase a new CDMA version of the iPhone 4 to switch carriers.
Verizon's recent decision to provide reimbursement for AT&T subscribers who trade in their old iPhones when moving to a new iPhone 4 on the carrier's network could make a difference, noted Lisa Pierce, an independent wireless analyst at the Strategic Networks Group.
"But both AT&T and Verizon Wireless customers might wait until they know how long [Verizon's] 'incentive-level' unlimited data price for iPhone 4 lasts, and what the new/regular price will be," Pierce said. On the other hand, Pierce also noted that Verizon's currently favorable market perceptions "would suffer a serious blow" if AT&T's rival attempted something like a "bait and switch" on data prices.
ZTE Becomes a Major Player
The big news in the global cell-phone market was the rise of ZTE to the number-four vendor slot in the fourth quarter. IDC noted that the company's lower-cost feature-phone shipments have been steadily spreading from its home country of China to emerging markets in Africa and Latin America.
More recently, however, ZTE has been moving a significant number of midrange devices. According to IDC, at least some of the Chinese company's recent success is directly attributable to its rapidly expanding smartphone line, such as the Android-based Blade and Racer. Overall, ZTE's shipments in the fourth quarter rose 76.8 percent in comparison to the year-earlier period.
However, change among the number-four and -five vendors could be a regular occurrence this year, noted IDC Senior Research Analyst Ramon Llamas. "Motorola, Research In Motion, and Sony Ericsson -- all vendors with a tight focus on the fast-growing smartphone market who had ranked among the top five worldwide vendors during 2010 -- are well within striking distance to move back into the top-five list," Llamas said.