Smartphone Tipping Point

Lots of time is spent in the smartphone market today talking about which device is the best, or which platform is going to be the winner. Somebody is always writing or talking about how iOS is better than Android, or why BlackBerry is on it’s way out, or how Microsoft is going to come charging ahead with Windows Mobile 7, etc. I’ve even participated in this discussion on numerous occasions.  And the topic of which mobile platforms will be winners and which platforms will be losers  deserves time and attention, especially if you are an app developer or plan on rolling out your own app.

But what can get lost in the discussion is the fact that smartphones in general are making huge gains in the market. And I’m not just talking about their capabilities, though they are making huge gains on that front. What I’m talking about is the growth in the number of people who either already own, or are purchasing smartphones vs. feature phones. Nielsen recently released some very interesting numbers in terms of smartphone sales. In both the first and second quarters of this year smartphone sales were 55% of all cellular phone sales in the US with the remaining 45% being feature phones. Feature phone is industry parlance for regular cell phones.

There are two things that are significant about this statistic. The first item of significance is that this year marks the first time that smartphones outsold feature phones in the US based on unit sales. In other words, it’s the first time ever that more people are walking out of a store carrying a new smartphone than are walking out of a store with a new feature phone. In the first half of 2010 the percentage of new smartphones sold ranged from 32%-34%. In the second half of 2010, this percentage jumped into the mid 40′s. This year that percentage has jumped to 55%.

What this means is that the shift from people carrying feature phones to people carrying smartphones has reached a tipping point. While smartphones have been gaining ground on feature phones in terms of market share, now they will be able to do so much more rapidly with more smartphones being sold than their feature phone counterparts. In the US today, that market share is just under 40% for smartphones. Nielsen did a projection back in 2009 expecting smartphone market share to pass feature phone market share by the end of 2011. While it doesn’t appear smartphones will actually achieve that by the end of this year due to economic issues, it won’t be far off of that.

The second item of significance is that the 55% number does not appear to be just a spike. Smartphone sales seem to be holding steady at that 55% level. Remember, both first and second quarter sales of smartphones checked in at 55%. So there wasn’t an advance in penetration of smartphone sales, but the sales did hold steady in a tough economy. What all of this adds up to is that smartphone market share should continue to grow at an accelerated pace.

Smartphones have already changed how we interact with our “phones”, because they are in fact much more than “just phones”. People are talking on smartphones less, and sending texts, going on the web, streaming video and audio, and using apps more and more. This gives those of us with businesses new ways to reach our customers, channel, suppliers, and employees. If we are creative about how we interact with them, and the information we share, we can use smartphones to provide real value to our constituents and improve the way they view us. Of course leveraging the technology poorly can have a negative effect as well. So take advantage of the advance of smartphones, but do it intelligently and creatively.