Mobile phones: Market divides into smartphones and entry-level devices, especially in developing and emerging markets

[eetimes] With developed markets saturated and shifting mostly high-end handsets, and mid–tier phone providers continuing to struggle, market tracker Juniper Research suggests low-cost devices sold to the emerging markets will be the only ray of hope in the short term.

Juniper is forecasting that, for the next five years to 2014, annual sales of low cost mobile handsets will rise by 22 per cent to over 700 million.

The research house note that efforts by industry players to lower the TCO (total cost of ownership) for devices and services to the sub $5 mark are already reaping the benefits in markets such as Bangladesh, Pakistan and India.

However, Juniper suggests it will be the Africa and Middle East region that will account for the largest annual shipment volumes by 2014, with 166 million low cost handsets predicted to be sold, representing 24 per cent of all sales that year and up by 54 per cent since 2009.

"With around 80 per cent of new mobile users set to come from emerging markets over the next six years, it is essential that operators and vendors work together to dilute the price barriers associated with mobile technology and to provide ongoing support through the development of specific social and personal services, such as Nokia's Life Tools suite," said Juniper analyst Andrew Kitson.

But the analyst cautions that commercial success will only be achieved if operators in these emerging markets adopt "revolutionary new business models and if governments can be persuaded not to place excessive taxes and duties on device sales and imports."

And with the rapid growth of the smartphone sector, Juniper is predicting that these devices, such as the beefed-up iPhone 3G S and Palm Pre launched this week will account for 27 per cent of mobile device shipments in 2014, up from 13 per cent in 2008.

The result, according to Kitson, is that the market is effectively polarizing into two groupings - entry level and high end devices - with the mid range market, mainly played in by Motorola and Sony Ericsson being squeezed.

Low-cost phones, emerging markets to drive handsets sector