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Grow Your Business Technology

Smartphones Winning Mobile Phone Wars

Although the worldwide mobile phone market continues to experience healthy growth, the market for feature phones headed south for the first time in nearly two years, a recent report shows. Feature phones are low-end mobile phones that don’t have the powerful functionality of smartphones such as the iPhone and the Android.

Overall, the mobile phone market grew 11.3 percent year over year in the second quarter of 2011, according to data gathered by International Data Corp. Vendors shipped 365.4 million units in the second quarter of this year, compared with 328.4 million units in the same quarter in 2010.

Though healthy, the growth in the second quarter of this year was lower than IDC's forecast of 13.3 percent and was also below the 16.8 percent growth in the first quarter of 2011.

Tapping the brakes on mobile phone growth was the decline in demand for feature phones, which shrank by 4 percent in the second quarter of this year when compared with 2010. The decline was greatest in economically mature regions such as the United States, Japan and Western Europe as users rapidly shift to smartphones .

"The shrinking feature phone market is having the greatest impact on some of the world's largest suppliers of mobile phones," said Kevin Restivo, an IDC research analyst. "Stalwarts such as Nokia are losing share in the feature phone category to low-cost suppliers such as Micromax, TCL-Alcatel and Huawei."

The top five mobile phone vendors are Nokia, Samsung, LG Electronics, Apple and ZTE, IDC said.

"For the overall market to grow by double digits year over year, despite the decline in feature phones, is testament to the strength of the global smartphone market," said Ramon Llamas, another IDC research analyst. "While this is not a new trend — smartphones have been the primary engine of growth for the last several quarters — it does mark something of a transition point, as demonstrated by the growing number and variety of smartphones featured in the vendors' portfolios."

There is little promise of a brighter future for feature phones. Shipment growth of these devices won't exceed 1.1 percent in any year forecasted by IDC.

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.

Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.