The current economic situation has proved that the mobile phone market generally is not immune to recession but, in Western Europe, at least the rapidly expanding consumer market for the latest smartphones grew by nearly 26% in the last quarter of 2008 compared to the corresponding period of 2007, according to IDC’s latest European Mobile Phone Tracker report.

IDC reports that vendors shipped 9.3 million smartphone units in Q4 2008, which was 25.9% higher than the 7.4 million shipped in the fourth quarter of 2007, and for the full year 2008, 31.9 million units were shipped, 36.1% higher than the 23.5 million units shipped in 2007.

Francisco Jeronimo, research manager with IDC's European mobile phone devices and trends, said that in particularly difficult economic situations, vendors and operators can find good opportunities to increase their businesses. “The converged mobile device, or smartphone segment, has shown that when the right needs are identified and valued-added products and services are presented, consumers will continue to replace their devices and maintain expenditure on communications when they perceive that value for money.”

IDC maintained that, over the past few quarters, converged mobile devices have been experiencing higher growth rates than the overall mobile phone market, and that while the overall market saw a record fall of 13.5% during the last quarter of 2008, the converged mobile devices grew.

The report says that several new converged mobile devices were launched in Western Europe in the last quarter of 2008 and among the most popular were the BlackBerry Storm, BlackBerry Bold, T-Mobile G1 (the first Android OS device) and the HTC Touch HD.
 
IDC also says that some other devices launched in previous quarters ramped up for the sales season, becoming very popular as prices adjusted, with Nokia E71, Samsung Omnia, Sony Ericsson X1, iPhone 3G, and Samsung Omnia contributing to boost the sales of this segment among consumers.

According to Jeronimo, the launch of iPhone 3G last year attracted consumer attention to the smartphone segment in Western Europe., and “since then these devices have been seen as personal devices rather than just professional devices.”
 
“The good performance of this segment is a very good sign of opportunities from which vendors and operators could profit in light of the slowdown in the overall mobile phones market. Every economic crisis culminates in lower consumer spending to some extent, but is this market fall a consequence of less money or simply because devices are no longer attractive enough to keep replacement rates high,” questioned Jeronimo.

Jeronimo said that during economic slowdowns operators and consumers become more conscious about what they purchase, with consumers more careful when it comes to replacing their handsets.
 
“If a good value proposition is not presented, they postpone their buying decisions. On the other hand, operators need to drive replacements throughout handsets that allow new services and generate new revenues."

Jeronimo observed that in mature markets like Western Europe, consumers find data access a key requirement on their devices, either for Internet access, push email, IM, social networking, PIM, or specific enterprise-related applications. As a consequence converged devices that run high-level operating systems are replacing feature phones (running proprietary and closed operating systems) and, Jeronimo added, in the last quarter of 2008 datacentric devices grew 94% year on year, contrasting with the 21% decline of the voice-centric devices.

"We believe that feature phones will decline in the coming years and will be replaced by converged mobile devices. Manufacturers and operators are working closely to bring down the price of operating systems to be able to introduce more affordable converged mobile devices. The market is heading towards operating systems that allow third-party applications, can run independently of the operator's network, and can run several applications concurrently," Jeronimo forecast.

Jeronimo said converged mobile device growth was slowing annually, but still represented two-digit growth, in a clear contrast to the overall sector's negative growth. "This slight slowdown in smartphone growth is due to factors other than purely economic reasons. As smartphone penetration increases, growth rates tend to be lower.”

On the other hand, says IDC, “the number of devices on the market is clearly low compared with traditional mobile devices. Traditionally, these devices were business-related and difficult to use for most end users without a specific need. Besides, prices are usually high for consumers without a clear need for such types of device," said Jeronimo.
 
IDC concluded its report with a list of the top mobile phone vendors, with Nokia as the smartphone leader with market share of 53.6%, followed by Research in Motion with 16.7 percent and Apple achieving marketshare of 10.7% in the smartphone segment, making it the third biggest segment player in Western Europe. Trailing behind the big three were HTC with 6.8% share of the smartphone market and Samsung in fifth place with 5.5% of the market.