Smartphone Gain Brings Some Pain - Twice

Smartphone Gain Brings Some Pain

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- Smartphone sales have soared to new heights this year and might have gone higher if not for component shortages that, according to one analyst, could keep supplies of select models limited through early 2011.

Carriers have launched more new smartphones to date this year than last year, mainly Android-based models, and more new models are still in the works for later this year.

“There have been more [introductions] than usual, with Motorola and HTC releasing some ‘hero’ devices, as well as some vendors getting more serious in this space, LG and Samsung, or other vendors just getting started, Kyocera and Dell,” said Ramon Llamas, IDC senior research analyst.

“Add on top the usual releases from market leaders Apple and RIM, and it’s quickly becoming a bigger market,” he noted.

Neil Shah of Strategy Analytics also noted the influx. “2010 is the year where most vendors have looked forward to refreshing their smartphone portfolio,” he said, pointing to Apple’s launch of the iPhone 4, Samsung entering the smartphone market with its new Android powered Galaxy Series across four carriers, and HTC increasing its shelf share across the Tier-1 US carriers. In addition, he said, “the rising adoption of Android as a preferred choice of smartphone operating system for vendors such as Motorola, HTC and Samsung have led to an increase in the number of smartphones across carriers in the U.S.” The trend has been reinforced by aggressive data plan pricing and data promotions by carriers seeking to raise their average data revenue per user, he noted.

New smartphones announced or shipped in recent weeks include:

• BlackBerry’s first touchscreen slider, the $199 Torch 9800;

• Dell’s Android-based $299 Streak with 5-inch screen and the $99 Android-based Aero;

• The $149 SonyEricsson Xperia X10, its first Android- based smartphone for the U.S. market;

• Motorola’s $199 Droid 2, an upgrade to the original Droid for Verizon and Charm, an Android 2.1-based phone that is Motorola’s first smartphone to pair a touchscreen with a fixed QWERTY keyboard. It’s available for T-Mobile at $74.99.

Previously, Motorola shipped its full-touchscreen Android 2.1 device, the Droid X at $199, for Verizon. And T-Mobile and AT&T launched their versions of Samsung’s flagship Galaxy class Android 2.1 phone, the Vibrant and Captivate, respectively, at $199.

Still to come include: Sprint’s 4G version of the Galaxy; the T-Mobile G2 with Google (see story below); RIM’s first 3G smartphone in the affordable Curve series. The Curve 9300 will be available for T-Mobile’s 3G network; and Nokia’s N8, the company’s first smartphone based on the company’s new Symbian^3 OS. It’s due as an unlocked phone at the end of September at $549.

The influx of Android smartphones, combined with carrier eagerness to build up data revenues, boosted shipments of smartphones to North America by 38 percent during the first half to 29 million. That compares to first half 2009 gains of 40 percent to 21 million, Strategy Analytics statistics show. The company expects full-year 2010 shipments to grow 33.4 percent to 65.1 million compared to 2009’s 32.6 percent gain to 48.8 million.

For its part, The NPD Group found that smartphone sellthrough to consumers, excluding enterprise purchases, rose in the second quarter to 42 percent of units sold to consumers compared to a year-ago 28 percent.

Rising demand, however, has combined with parts shortages to result in backorders for select models.

As of August 24, for example, Verizon’s website said that if a customer ordered a Droid X that day, the unit wouldn’t be shipped until Sept. 8. For the Droid Incredible, the shipping date was Sept. 7. Also on August 24, Sprint’s web site showed no expected availability date for the 4G EVO.

Shah of Strategy Analytics attributed smartphone shortages in large part to component vendors that during the Great Recession scaled back production and got caught off guard by “the sudden surge in demand for smartphones post-recession.”

Smartphone shortages, however, have been experienced mainly in markets such as North America “where the smartphones have hit mainstream,” Shah said. He cited intense competition among carriers that have raised their smartphone subsidies to lower consumers’ barriers to entry.

Although many component suppliers are now aggressively expanding the production capacity, Shah said he expects the disparity between supply and demand to continue at least until early 2011.

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