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Smartphones Projected to Overtake Feature Phones Next Year

Smartphone penetration of the US mobile phone market will overtake feature phone penetration by the end of 2011, according to projections from The Nielsen Company.

Smartphones Set for Rapid Growth

Although only 21% of American wireless subscribers were using a smartphone as of Q4 2009 compared to 19% in Q3 2009 and 14% at the end of 2008, Nielsen expects smartphones to account for more than half of the US mobile phone market by 2011, writes MarketingCharts. Nielsen predicts smartphones will account for 24% of the US mobile phone market in Q1 2010 and rise to about 33% market share by Q4 2010.

Growth will then accelerate in 2011, hitting 40% in Q1 2011 and about 50% by Q3 2011. Based on this rapid increase, smartphones should pass the 50% mark during Q4 2011.

Smartphone Users Show Loyalty

In a piece of good news for smartphone carriers, smartphone users demonstrate a good amount of wireless operator loyalty. In the last six months, roughly 77% of new smartphone buyers remained loyal to their wireless operator, while 18% switched to a new provider to get their new smartphone with the remaining percentage made up of first-time smartphone buyers.

Interestingly enough, the percentage of people who switched carriers and got a new smartphone is not higher than that of the average wireless subscriber.

This indicates that the portfolio of the wireless carriers in general is robust enough to prevent any wide-spread smartphone flight from one carrier to the other, with very few exceptions. The added bonus for wireless carriers is that smartphone owners are significantly more satisfied (81%) with their device than feature phone owners (66%).

Other Insights

■Fourteen percent of feature phone users only use their phone for voice communications, compared to 3% of smartphone users.

■Five percent of feature phone users have Wi-Fi, compared to 50% of smartphone users.

■Slightly more males (53%) than females (47%) use smartphones.

■Two-thirds of smartphone users are personal users and one-third are business users.

■Hispanic Americans and Asians are slightly more likely to have a smartphone than what their share of population would indicate, which is a trend Nielsen observes in the adoption of other mobile data services.

Smartphones Drive Web 2.0

The increasing popularity of smartphones will be a key driver in the expected growth of the web 2.0 market to almost $19 billion by 2014, according to Juniper Research. Juniper sees the mobile phone as a central catalyst for web 2.0 (which encompasses social web, geolocation and presence), because it is carried with the user at most times, is ideally placed to capture information at its source, and is a key enabled of user-generated content and social web interaction.

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