Smarter than the average

Next-generation multimedia technology is having a major impact on the mobile handset market, particularly in the Middle East, where sales growth of ‘smart’ handsets is outstripping more established markets, including Europe.

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By  Aaron Greenwood Published  August 9, 2006

|~|Sony-Ericsson200.gif|~|Sony Ericsson smartphones.|~|Smartphone devices, or mobile handsets with intrinsic PC-style multimedia capabilities, are carving an important niche in the Middle East handset market, despite the lack of widespread 3G and Wi-Fi services in the region. While demand for mobile multimedia devices has in the past come primarily from the corporate arena, the increasing availability of devices designed specifically for consumers has seen sales in the sector rapidly close ground on the enterprise market. The surge in smartphone sales has been to the detriment of traditional PDA devices, which previously dominated the market. Indeed, the trend has largely been attributed to the increasing availability of compact handsets, with consumers shying away from bulkier PDAs. According to a recent GfK Marketing report, smartphone sales worldwide grew by 17.9% in the first half of 2005, compared to PDA sales, which actually declined by 38%. Furthermore, ABI Research recently suggested that smartphones would account for 15% of the overall global handset market in 2006, equating to 123 million units shipped. ABI predicts that more than a quarter of all handsets in circulation in 2008 will be smartphones. The company is supported by rival market research firm Canalys, which reported a 25% year-on-year increase in smartphone sales worldwide in the first quarter of this year. The company predicts up to 40% year-on-year growth in shipments over the next three years. Of interest is the company’s finding that smartphone shipments in the Middle East and key markets in Africa are actually outstripping those in Europe. During Q1 2006, shipments in Middle East and Africa accounted for 49% of total units sold — some 3.18 million units — while 3.36m units were sold in Western Europe. In the first quarter of 2005, Western Europe accounted for 71% of all units shipped with the rest of the region accounting for 1.5m units — just 29% of the overall EMEA total of 5.23m units. “Smart mobile device shipments in Q1 fell 10% year-on-year in Western Europe,” says Canalys research analyst Nick Spencer. “But growth for EMEA was achieved by rises of 76% in South Africa, 128% in Poland, 101% in Russia, and with markets such as Saudi Arabia, Turkey and the UAE almost doubling. “The vast majority of the devices shipping in CEMA, as elsewhere in Europe, are Nokia S60 smart phones, but vendors such as Mio Technology, Motorola, Orange, Qtek and RIM are all enjoying year-on-year growth in excess of 200% there, albeit from fairly small bases.” This shift in demand is seeing the arrival of a string of players marketing smart devices based on one of two main rival platforms: Microsoft’s Windows Mobile and Symbian OS. Microsoft – a relative newcomer to the sector – has achieved remarkable success in a short period, with a string of development deals with key smartphone manufacturers including HP, i-mate and O2. Windows Mobile operating software provides functionality and an interface similar to Microsoft’s Windows PC platform. It also supports many of the familiar software programmes common to Windows, including an Office suite that includes Word, Excel and Outlook. Recent research suggests the worldwide Microsoft Windows Mobile-based smartphone market will grow by 400% in the coming two years. Indeed, ‘traditional’ handset manufacturers including Samsung and Motorola have committed to rolling out smartphones based on Windows Mobile OS over the next 12 months. Samsung recently previewed its ultra-slim SGH-i320N smart handset, which features a full Qwerty keyboard, while Motorola expects to ship more than five million units this year of its Moto Q smartphone range, which it launched in May.||**||Nokia boosts Symbian connection|~|Nokia-e200.gif|~|Nokia's E-series smartphones.|~|Despite booming support for its Windows Mobile OS, Microsoft has been unable to sway the biggest player of them all, Nokia, away from the Symbian platform. The key to this has been Nokia’s successful development of the S60 mobile software suite of applications, based on Symbian OS. The company licenses the software to third-party developers, which in turn develop applications specifically for S60 handsets. Nokia has also licensed the S60 software application package to rival handset vendors, including Siemens, Samsung and Panasonic. If nothing else, S60 provides a formidable opponent to Microsoft’s Windows Mobile OS simply by virtue of the omnipresence of Nokia in the marketplace. Nokia continues to dominate the market for smartphone devices, both regionally and worldwide. According to Canalys, Nokia managed to increase its lead in the European, Middle East and African smartphone markets in the first quarter of 2006, accounting for a massive 76% of all handsets sold — up from 67% a year earlier. Nokia’s smartphone range has proliferated markedly in the past 12 months as the company looks to bolster its stocks in the sector. The company’s chief executive, Jorma Ollila, pointed to the potential of the market earlier this year, when he told a conference in Spain he expected smartphone sales to more than double worldwide in 2006. Nokia is also successfully tapping the booming market for mobile music devices with its smart handset range. The company has shipped more than one million units of its 3250 music phone – which features S60 software – since launching the device in March. In this latest iteration, S60 enables users to purchase and download music to the handset over the air. The handset also features a two-megapixel camera and 1GB of internal storage providing space for up to 750 songs. Sony Ericsson is another vendor hitting the music trail to drive sales of its smart handsets. The company has successfully leveraged the heritage of the Sony Walkman brand to offer a range of music-focused smartphones, with some offering up to 4GB of internal memory, or as much as a premium Apple iPod nano. It is also offering a range of Cyber-shot handsets boasting high-resolution cameras, headed by the K790, which features a 3.2-megapixel camera with flash and lens cover, dedicated shutter button, auto red-eye reduction, PictBridge support, and image stabilisation. Ultimately, the fact that smartphone sales continue to boom across the Middle East despite a widespread lack of 3G infrastructure, making many of the inherent features of these technologically impressive handsets redundant, is an indication of the tech-savvy nature of the consumer markets of the Middle East. While many international handset vendors portray the region as one with an insatiable demand for entry-level ‘dumb’ handsets, the smart players recognise the wider potential for demand in sophisticated markets in the region, particularly those in the GCC.||**||

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