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Gartner: Smartphones To Outsell Feature Phones this Year
By Barry Levine
Posted: February 14, 2013 11:48am PST

A driver of smartphones' appeal is the increasing availability of inexpensive smartphones, such as $150 Windows Phone handsets, in Africa and other developing markets, said analyst Avi Greengart. "Feature phones are not dead and are likely to be around for a while, but if you stretch out the timeline far enough," smartphones will take over, he said.

Is it time to start saying our goodbyes to feature phones? Perhaps. Research firm Gartner is predicting that smartphones will, for the first time, outsell feature phones later this year.

The research firm's prediction of the smartphone's approaching dominance comes as worldwide phone sales of all kinds declined 1.7 percent in 2012 compared with the previous year. Gartner attributed the decline -- the first since 2009 -- to "tough economic conditions, shifting consumer preferences and intense market competition."

In the fourth quarter, smartphone sales rose 38.3 percent year-over-year, and feature phone sales were down 19.3 percent. The firm projects smartphone sales to end users will approach 1 billion units by the end of this year, out of total phone sales of 1.9 billion.

Feature Phones 'Not Dead'

Avi Greengart, an analyst with industry research firm Current Analysis, said Gartner's prediction of smartphones overtaking feature phones "seems reasonable." In developed markets such as the U.S., he said, smartphones are already kings. He noted that, as an example, AT&T's smartphone sales were "in the 80 to 90 percent range" of all of their phone sales, and the installed base in the U.S. "is creeping up to over 50 percent" for smartphones.

Greengart added that a key driver of smartphones' appeal is the increasing availability of relatively inexpensive smartphones, such as $150 Windows Phone handsets, in Africa and other developing markets. For the moment, he said, "feature phones are not dead and are likely to be around for a while, but if you stretch out the timeline far enough," smartphones will become cheap enough to take over.

To no one's surprise, Samsung and Apple continue to dominate the world market as phone makers, together accounting for 52 percent of all sales. Samsung was first in 2012, both for smartphone sales and all mobile phone sales. The Korean company takes 42.5 percent of the global Android market, with no other competitor in double digits.

BlackBerry Down, Windows Up

In the fourth quarter, Apple saw an increase of nearly 23 percent year-over-year, although Gartner noted that "consumers' demand favored the less expensive iPhone 4 and 4S models." Nokia's handset sales have improved because of its Asha mobile phones and the latest Lumia Windows Phone 8 models, but the company's total market share hit its lowest point at 18 percent. Nokia's smartphone sales for 2012 dropped 53 percent over 2011.

Huawei reached third place for smartphones for the first time. The Chinese company saw smartphone sales in 2012 that were nearly 74 percent higher than 2011.

The Android platform continues its path toward complete world domination. Its market share in fourth quarter was nearly 70 percent, compared with 51.3 percent in 2011.

Apple's iOS platform dropped slightly in the same period, from 23.6 percent in 2001 to 20.9 percent in this year's fourth quarter. Research In Motion, now called BlackBerry, stood at 3.5 percent compared with 8.8 percent in Q4 2011, and Microsoft's Windows Phone more than doubled from 1.8 percent in Q4 2011 to 3.0 percent in 2012.

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