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In-Stat: Smartphones To Be Mainstream By 2013

Technology research firm In-Stat projects that smartphone sales will grow strongly over the next five years, accounting for 20% of all handsets globally by 2013 compared to 10% today.

In North America, the number of smartphones will increase 15% annually over the next five years, more than doubling to 62.3 million units in 2013. With prices coming down as the choice of smartphones increases, more than one-third of U.S. wireless users in 2008 said they plan to get a smartphone the next time they upgrade their phone. Today, 36% of U.S. subscribers already own one.

While the iPhone has been the catalyst for expanding the appeal of smartphones to date, In-Stat expects that phones powered by the open mobile operating system--including Google's Android platform--will overtake the popular Apple device in the coming years.

So if only 9.1 million Linux-based phones were sold last year compared to 16.2 million iPhones, the ratio will be reversed by 2013 when the former sells 68.1 million units worldwide to the iPhone's 33.4 million.

No one stands to benefit more from that trend than the Web search giant--which unveiled its first phone, T-Mobile's G1, last year. "Google and its partners have the potential to aggressively enter the smartphone segment of the market by creating a development environment that is to be the most convenient for mobile applications development," according to the In-Stat report "Smartphones: Heading to the Mainstream." "This will lead to even greater interest in the smartphone market segment."

The study also indicates that demand for the iPhone will be diluted by the host of imitators it has inspired, including the Samsung Instinct, the BlackBerry Storm, the G1, and the Nokia N97. "A consumer that is seeking to upgrade their existing device can shop at their current wireless operator if they prefer and find a device that is comparable to the iPhone," according to In-Stat.

While none of these devices have taken off like the iPhone, the hundreds of thousands or more than a million units that some have sold indicate "a very fast acceptance early in their release." A number of competitors including Palm, BlackBerry, Google and Microsoft are also opening their own mobile app stores to compete more directly with Apple.

What about the impact of the recession on smartphone sales overall? In-Stat says its estimates account for the economic uncertainty that will lead people to cut discretionary spending in the U.S. and worldwide. "This will slow growth from what it otherwise would have been," according to the report.

It also acknowledges some uncertainty about the uptake of Android-based phones. "The greatest factor that will affect the forecast is the potential adoption of Google's Android platform. This forecast assumes that it is successful, but not necessarily the blockbuster that Google would like to see."

And the biggest question for any Google phone is whether China mandates the use of a smartphone platform such as Android for 3G licenses that the government plans to offer soon. Outside of Japan, smartphone sales are expected to increase 26% annually throughout Asia over the next five years.