Will Smartphone Sales Flatten?

Posted by: Olga Kharif on February 10, 2009

Nomura analyst Richard Windsor sounded an alarm this morning. While most cell-phone manufacturers still expect smartphone sales to grow 10% to 20% this year, he believes that they will hardly grow at all. “I find that the industry view that there will be good growth in smartphones in 2009 to be fundamentally flawed,” Windsor writes. “I see 2 years of almost no growth before a strong bounce back in 2011.”

Could this be right? The answer to this question will determine the outlook for a wide range of companies, including Nokia, Research In Motion, Apple and HTC.

There are several reasons to think Windsor’s view may be too pessimistic. iPhone reseller AT&T activated 1.9 million subscribers in the fourth quarter. That’s way more than the 2 million units it sold in the six months of 2007 that iPhone was available. And HTC had reported brisk sales of the T-Mobile G1 device. So consumers were still buying smartphones over Christmas.

That said, I do think that 10% to 20% growth is unrealistic to expect. Already, in the third quarter of last year, smartphone sales growth has slowed to 11.5%, according to consultant Gartner. That was before the massive wave of layoffs that’s kicked off in December and January. Everyone I know is curbing their spending — on everything. People worry about job security and mortgage payments. Now is not the time to buy an expensive phone and a related high-priced service plan. So I think the truth is somewhere in the middle: We may see smartphone sales grow above zero, but below 10%.

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Reader Comments

gerrrg

February 11, 2009 09:34 AM

Smart phones are a better investment than a standard cell phone for many people out of work that are looking for jobs OR are searching for contract work. They give you instant access to emails and keep you in close communication with important, prospective clients and employers.


Clearly, very-low income individuals and households cannot even afford the cost of a smart phone to begin with, so it's not clear that there would have been growth in that demographic, recession or not. BUT, in the middle and upper-middle income brackets, I'm betting most people will choose to gain any advantage over the next fellow, by upgrading to a smart phone when their contract expires.

New Smartphone User

February 15, 2009 07:36 PM

I concur with Gerrg! I purchased my first smartphone yesterday, the new BB curve. It has more features and more memory. Currently, I am studying for my MBA. I believe the smartphone will give me an advantage in my job search.

Sam Siphandone

February 20, 2009 06:07 PM

Recession like this, who is going to spend the hard-earned money for those smartphones!!! I don't and I won't. I am happy for those $10 per month of those prepaid phone...

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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