iPhone Makes Users Want Smarter Smartphones, Says Report

Smartphone prices are falling as their shipment numbers increase, says a new report from ABI Research, which points to the iPhone as contributing to consumers' increased interest in operating systems and software.

Apple's iPhone, and its introduction of the ability to customize a smartphone with downloadable applications, is part of the reason why smartphone retail prices are falling as shipment volumes are on the rise, states an Oct. 29 report from ABI Research.
 
While in 2007, 18 percent of smartphones were priced under $200, in 2009 that number grew to 27 percent, and by 2014 researchers expect 45 percent of smartphones to wear price tags under the $200 mark.
 
"Manufacturers see consumers increasingly demanding smartphones, because of their better understanding of the value that a smartphone delivers," said Kevin Burden, with ABI. "Nearly all consumers used to choose handsets based on the physical characteristics of the hardware, not the software inside. The iPhone changed that: more users are now shopping for their handset based on the operating system and software, which is something once thought to be very unlikely."
 
Part of Google's success with its Android operating system has come thanks to the quickly growing number of applications in its Android Market, which is estimated to exceed 10,000. While no match for Apple's App Store, which is nearing 100,000 applications, it far exceeds the less-than-300 in Palm's nonetheless growing App Catalog.
 
ABI finds smartphones to be increasingly priced within range of conventional phones - or, feature phones - as handset makers and carriers finagle with marketing strategies and subsidies.
 
There will always be the high-end concept phones meant to highlight a manufacturers' design and innovation prowess, ABI points out - Nokia's flagship N97 smartphone, for example, arrived priced at $699, unlocked to a carrier and so without a subsidy. However, the greatest increase in smartphone shipment volumes over the next five years, states ABI, will be of those in the $100 to $200 range.
 
"Prices will hold at a certain point," said Burden. "We may never see a $30 smartphone. But over time, smartphones will take a substantial part of the mainstream handset market."
 
Separately, research firm iSuppli has stated that it expects the overall smartphone market to grow from the 184.2 million units shipping in 2009 to 334.1 million in 2011 and onward to 44.5 million units in 2013, largely encouraged by the iPhone's arrival in China.  
 
iSuppli predicts that smartphone shipments in China will reach 42.5 million in 2010 and continue climbing to 63.6 million in 2013.