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Downside for Shrinking Mobile Feature Phone Market

The worldwide mobile phone market grew 11.3 percent year-over-year in the second quarter of 2011 (2Q11), despite a weaker feature phone market, which declined for the first time since 3Q09.

According to the latest market study by International Data Corporation (IDC), vendors shipped 365.4 million units in 2Q11 -- compared to 328.4 million units in the second quarter of 2010.

The 11.3 percent growth was lower than IDC's forecast of 13.3 percent for the quarter and was also below the 16.8 percent growth in 1Q11. The feature phone market shrank 4 percent in 2Q11 when compared to 2Q10.

The decline in feature phone shipments was most prominent in economically mature regions, such as the United States, Japan, and Western Europe, as users rapidly transition to smartphones. This was the first decline since Q3 2009 and reflected a combination of conservative spending and continued shift to smartphones.

"The shrinking feature phone market is having the greatest impact on some of the world's largest suppliers of mobile phones," said Kevin Restivo, senior research analyst at IDC.

For the overall market to grow by double digits year over year, despite the decline in feature phones, is testament to the strength of the global smartphone market. While this is not a new trend -- smartphones have been the primary engine of growth for the last several quarters -- it does mark something of a transition point, as demonstrated by the growing number and variety of smartphones featured in vendor portfolios.

The feature phone forecast isn't expected to be any rosier in the quarters and years to come. Shipment growth of the device type won't exceed 1.1 percent in any year forecasted by IDC.

In North America, smartphones once again took center stage, propelled by lower prices, key device launches, and enhanced channel marketing. In particular, Android-based devices extended their lead in the United States and took leadership in Canada.

Meanwhile, demand for feature phones continued to slide, but there still existed pockets of interest for voice-centric and quick-messaging devices. Still, as the region heads towards a smartphone-centric future, IDC expects feature phones to represent an increasingly smaller portion of the market.

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