PC vendors tap into smartphone market

Weary PC vendors are looking to the buoyant smartphone market for relief from flagging computer sales.

  • E-Mail
By  George Bevir Published  March 1, 2009

Weary PC vendors are looking to the buoyant smartphone market for relief from flagging computer sales.

For the first time since 2001 when the dot com bubble went pop, sales of PCs are expected to fall, with consumers deferring the replacement of their home computers and IT managers and CTOs seemingly eager to cling on to any budget they might still have.

In January, Lenovo, the world's fourth largest PC maker said it would cut 11% of its workforce in response to the fall in demand for its products.

Apple reported a slowdown in sales of its computers, while Dell last month revealed a scheme to boost enterprise spending through an offer of 0% finance to customers who buy US$25,000 worth of equipment.

It has been a similar story in the handset market, with customers eking a few months more life out of their mobile devices, and retailers responding by running down supplies of stock.

Research firm Strategy Analytics' last snapshot of the market stated that 295 million cellphones were shipped worldwide during the last quarter of 2008, which was down a "significant" 10% from 329 million units a year earlier.

In contrast sales of smartphones are expected to rise. ABI Research has found that although demand for smartphones will "slow slightly" in 2009, it will still increase at an average annual unit shipment rate of 19% through to 2014.

Increasing appetite

It seems that consumer appetite for devices that allow users to surf the web, send email, use GPS-enabled navigation software and view videos looks set to continue to grow, and not only in markets where the devices already have a foothold.

"The upgrade cycle from basic phones and feature phones to smartphones has only just begun in developed markets and it has a long way to run in emerging markets," says Neil Mawston of Strategy Analytics.

Mobile operators should be overjoyed by consumer interest in smartphones; devices with increased capabilities provide opportunities for operators to shore up decreasing ARPU through additional content, and making sure that customers have the right tools to access their products and services is essential.

Large screen devices make accessing the internet a more attractive prospect and operators can boost ARPU through ‘bolt on' packages of mobile data usage.

Meanwhile, adjustable user interfaces and the ability to download ‘widgets' and additional software also provide an opportunity for additional revenue. And with music and video players as standard on smartphones, potentially lucrative download services can also be launched.

"Smartphones are a high-growth market for mobile computing that PC vendors cannot afford to ignore," Mawston says.

"Apple, Samsung and Sony (Ericsson) have already made the successful leap from laptops to smartphones and this is encouraging other brands, like Acer and Dell, to follow their lead."

"We expect almost all the major PC and laptop vendors to have a presence in smartphones by 2010.

Apple, of course, moved into the smartphone market when it launched the iPhone in 2007.

Since the iPhone's release, Apple has steadily grown its share of the market and in the mean time every established handset manufacturer has released it's own internet focused, full touchscreen device that bears more than a passing resemblance to Apple's handset.

Acer's entrance

Last month, at Mobile World Congress in Barcelona, Acer unveiled eight handsets that it hopes will enable it to "establish Acer as the world's leading mobile solutions company."

The PC vendor has set itself the aim of becoming "one of the top five in the smartphone market in the next five years", and its strategy of launching eight devices in one go (with more expected later in the year) is the opposite of Apple's single device approach.

"We're not coming into this market and hoping for a home run; one size doesn't fit all, so we have addressed the market with multiple form factors," Aymar de Lencquesaing, president of Acer's Smart Handheld Business group told journalists in Barcelona.

At the same event Toshiba unveiled the TG01, a touchscreen device similar in form factor to the iPhone and the first handset to feature Qualcomm's Snapdragon chip.

Dell's apparent desire to enter the smartphone arena is still shrouded in rumour, with the company declining to comment on speculation that only increased when AT&T Mobility CEO Ralph De La Vega told journalists and delegates gathered in Spain that "Dell announced they're entering the smart phone market".

"RIM, Nokia and others have plenty to fear from the PC vendors," says Mawston.

"Apple has already made rapid progress and it has shown that a PC vendor can profitably cross the convergence chasm from PCs to smartphones. RIM, Nokia and others are not just facing competition from traditional cellphone players, but from the PC industry, too. Competition is rising," he adds.

Although there is agreement amongst analysts and experts that the size of the market will grow, the question is whether or not PC vendors will be able cash in on the opportunity as the market becomes more crowded.

"Once [the PC vendors] have captured the industry's attention, then they can get down to the hard work of developing relationships with major operators and building a retail presence," adds Mawston.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code