By Lisa Johnston
New products on display at the American International Toy Fair, held in N
LAS VEGAS — New cellphones launched here at International CES will enter a market that will stabilize or rise slightly in 2013 following a year that one supplier called “a correction year.”
Smartphone shipments into the U.S. grew at a slower rate in 2012 as overall cellular handset shipments slipped, but the overall market will stabilize or perk up a bit in 2013, with smartphones again leading the way, marketers told TWICE.
Carriers’ aggressive rollout and promotion of 4G LTE, opportunities for niche products such as smartphone/ tablet hybrids, prepaid phones, and low-price Android phones and LTE phones will help drive sales, they said. Here at CES, attendees will see new smartphones from Huawei and Sony and possibly a new high-end smartphone from ZTE.
Products are expected to include a Sony smartphone with MirrorLink, an industry-standardized technology that enables in-dash aftermarket and OEM touchscreenequipped stereos to control MirrorLink-compatible smartphones and stream their content via an in-dash interface that, for each brand of MirrorLink phone, will be the same from car to car. The interfaces of different brands of MirrorLink- equipped smartphones will be similar but not exactly the same.
Multiple factors conspired to drive down overall cellphone unit shipments in 2012 despite sharp rises in smartphone unit shipments, said James Fishler, marketing and go-to-market operations senior VP for LG Electronics USA. “Based on our estimates, 2012 was a correction year for the industry, driven by no ‘hero device’ launches in the first half of the year, carrier [early-upgrade] eligibility changes in 2011, and the overall economy,” Fishler said. As a result, industrywide sell-in fell about 10 percent in 2012 from 2011 “should recover somewhat in 2013 with year-over-year growth of around 2 percent,” he said.
For his part, Waiman Lam, ZTE USA’s wireless solutions senior director, estimated that total U.S. shipments reached 160 million units in 2012 and will post “a stable growth trajectory into 2013. “
Analyst Alex Spektor of Strategy Analytics saw 2012 cellphone shipments decline in the U.S. “not only because of the expected collapse of feature-phone volumes but also because of slowing growth in the smartphone segment.” The first half of 2012 “was particularly soft, as consumers delayed purchases and awaited refreshed models from Apple and Samsung,” he said.
Smartphone growth slipped in 2012, Spektor said, in part because of tighter early-upgrade policies by carriers. “Operators are doing this in order to protect their profitability from the costly impact of subsidies,” he said.
For his part, Muzibul Khan, chief technology officer of Huawei Device USA, said he believes “smartphone saturation is nearing or here.” Although LTE is driving the replacement cycle, he said, “overall replacement has slowed. Smartphone innovation has slowed, and most of the great features are now offered all the way to the low tiers. Therefore, consumers are at a point where their smartphone is ‘good enough.’”
Though smartphone growth is slowing, smartphone sales are still rising because of consumer demand, LTEnetwork rollouts, lower-cost Android smartphones and the accelerated adoption of prepaid smartphones, suppliers said.
“Low-priced smartphones, prepaid smartphones, the industry’s conversion to LTE (which drove higher tier products), very high subsidies on high-tier products (for example, Nokia) — which therefore provided high-tier features at a mid-tier price — all of these led [smartphone] growth in the U.S. in 2012,” said Khan.
ZTE’s Lam also attributed smartphone growth to bigger screen sizes, faster processers and rich software features built into the newer platform, such as Android Jelly Bean, Windows 8 and iOS 6, all driving device-replacement sales.
Market research and consulting company Futuresource agrees that the U.S. smartphone market continues to perform well. “Operator campaigns, particularly relating to superfast wireless broadband and 4G, helped personal penetration reach almost 50 percent in 2011, with sales exceeding 100 million expected in 2012, representing almost 70 percent of total handset sales,” Futuresource said.
ZTE’s Lam said smartphones have accounted for the majority of U.S. cellphone shipments since 2011 and, in 2012, were expected to account for 70 percent of the total units shipped.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.