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Low-Prices Driving Smartphone Shipment Growth

The global market for smartphones continues to forge ahead at a record pace. According to the latest market study by ABI Research, smartphones made up 19 percent of all handsets shipped in the second quarter -- that represents a 12 percent increase over the first quarter, and a 50 percent jump compared to the same quarter in 2009.

ABI's senior analyst Michael Morgan says that growth is being driven by falling handset prices. Cost is no longer much of an obstacle. One of the key remaining barriers to smartphone adoption in subsidized markets is now the cost of the data plan -- rather than the cost of the handset.

According to ABI, 10 percent would normally be considered very good quarter to quarter growth, Morgan notes, but in the smartphone segment that's not the case.

"The market is exploding," he says, "but there are so many players and so many operating systems that 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 addition, the huge numbers of smartphones now connected in the U.S. market -- especially iOS and Android models -- are creating network capacity concerns that are impacting the value chain within the mobile ecosystem.

Apple shipped about 8.4 million iPhones in Q2, of which about 3 million were iPhone 4 models that only launched a couple of weeks before the end of the quarter. The Q3 results were even more impressive, posting a 68 percent quarter-over-quarter growth.

HTC also did very well, with shipments growing from 3.3 million to 5.3 million units the by the start of the third quarter, and its improvement continued through Q3.

RIM recently launched its latest OS but, says Morgan, "RIM hasn't seen the full benefit of its OS launch yet," with QoQ growth moving only from 10.5 to 11.2 million shipments.

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