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Smartphone Designers are Challenged to Differentiate

According to the the latest market study by ABI Research, smartphone shipments grew from 177 million in 2009 to 302 million in 2010 -- a remarkable 71 percent growth rate.

Meanwhile, handset OEM market share changed significantly. Nokia's share dropped from 39 to 33 percent, even as the collective share held by manufacturers of Android-based phones increased from 4 to 24 percent.

ABI's vice president Kevin Burden said, "the market has been disrupted during a period of record growth."

Today's smartphone includes a long and growing list of technologies, components and software. Some combinations are in demand, others are not. Smartphone OEM strategies determine how these components are used together into cohesive products.

With the rise of Android, the number of handset OEMs with significant smartphone market share increased in 2010. This competitive landscape is forcing handset makers to consider their device and portfolio strategies carefully.

Many are placing their bets on Android. Are they right?

ABI senior analyst Michael Morgan says "Motorola has pinned its entire turnaround strategy on Android. As competitors flood the Android ecosystem, Motorola wants to become known as the OEM that brings Android devices to business."

Meanwhile Samsung is hoping that it can convert its feature phone customers to smartphones, on the backs of both Bada and Android. And Nokia has now moved away from a purely proprietary OS strategy.

How are these strategies working? It appears that handset OEMs choosing Android have had success that is both driven by and limited to the reach of their distribution networks and operator partnerships.

Morgan says, "OEM-specific Android enhancements have not yet created a clear differentiation in people's minds. Smartphone OEMs adopting Android as a key platform must produce meaningful design innovation or risk losing significance."

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