Smartphones to Overtake Feature Phones in U.S. by 2011

Smartphones are rapidly growing in popularity and acceptance and will likely surpass the feature phone -- standard phone handsets with a few extra bells and whistles like basic e-mail and some games -- some time next year.

That's the projection from Nielsen Company, which found that smartphone growth is continuing to accelerate. Smartphones accounted for 21 percent of wireless subscribers at the end of 2009, but 45 percent of people surveyed said their next device will be a smartphone.

With mobile phone contracts running two years, those new purchases are spread over a long period. However, Nielsen projects that the split between smartphones and non-smartphones will be 51 percent to 49 percent by the third quarter of 2011.

Mobile Applications Explosion

For the most part, Nielsen attributes the shift to smartphones to a groundswell of new smartphone devices, in particular the iPhone, BlackBerry and Android phones, plus an "explosion" of new applications for them and the significant and continued decrease in the prices of those phones and carriers' data plans.

Nielsen found smartphones show higher application usage than feature phones even at the level of basic, built-in applications, and that the mobile applications are as much a part of the user experience as voice. For example, 14 percent of feature phone owners use their phone for only voice communications, but just 3 percent of smartphone owners are using it just to talk.

Conversely, 50 percent of smartphone users take advantage of a Wi-Fi network, while only 5 percent of feature phone users are employing it.

In a previous survey released earlier in the week, Nielsen found only 12 percent of feature phone owners have downloaded an app in the past 30 days, while 46 percent of smartphone owners have downloaded an application in the past month.

Falling quickly out of favor were Microsoft and Palm, which lost 7 percent and 5 percent marketshare, respectively. Nokia's Symbian OS continues to struggle with single-digit market share.

Smartphones are also engendering considerable loyalty. Approximately 77 percent of new smartphone buyers remained loyal to their wireless operator, while 18 percent switched to a new provider to get their new smartphone. Nielsen found that the percentage of people who switched carriers and got a new smartphone is no higher than that of the average non-smartphone wireless subscriber.

"This indicates that the portfolio of the wireless carriers in general is robust enough to prevent any widespread smartphone flight from one carrier to the other, with very few exceptions," Roger Entner, senior vice president of research and insights in Nielsen's Telecom Practice division, said in a blog post.

Andy Patrizio is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.


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