Smartphones Nearly 20% Of All Phones Shipped


The smartphone surge rolls on, with high-end handsets making up 19% of all handsets shipped in the second quarter, according to ABI Research. That represents a 12% increase over the first quarter, and a 50% jump compared to the same quarter a year ago.

With the cost of heavily subsidized smartphones no longer much of an obstacle, the only remaining barrier to purchase is the cost of the data plan. While 10% would normally be considered very good quarter-over-quarter growth, that would now be viewed as lackluster for smartphones.

With the market exploding, senior analyst Michael Morgan says the question becomes, "'Can this market structure be sustained?' Most observers say no: it needs to boil down to three or perhaps four key operating systems." In the U.S., BlackBerry, Apple's iOS and Android are clearly the top three in market share. The question is whether Microsoft can make a comeback with the launch of Windows Phone 7, and be among that group of top mobile operating systems.



As of the end of August, Microsoft had a 10.8% share among smartphone platforms, down 2.4% from the three months ending in May. That ranked it fourth behind BlackBerry-maker Research in Motion (37.6%), Apple (24.2%), and Google (19.6%). ABI says the huge numbers of smartphones now connected in the U.S. -- especially iOS and Android models -- are creating network capacity concerns that are "sucking the value out" of the mobile ecosystem.

In its third-quarter earnings report last week, AT&T said about 57% of its contract customers now use smartphones. Nearly a quarter (23%) of Verizon Wireless's contract subscribers do so. Both are also rolling out 4G networks to support growing mobile data demand.

Further highlighting burgeoning smartphone adoption, AT&T activated a record 5.2 million iPhones in the last quarter, while Apple sold 14 million of its flagship devices. Verizon's expected release of the iPhone early next year could boost sales even more. But the impact of Microsoft's recently unveiled Windows Phone 7 handsets won't become clear until 2011.

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