Feature phones are going out of style

Posted by Lydia Leavitt

As the mobile handset market grows, smartphones seem to be taking center stage worldwide while the demand for feature phones begin to dwindle.

The International Data Corporation (IDC) reports vendors shipped 365.4 million mobile units in the 2nd quarter of 2011 compared to 328.4 million units in the 2nd quarter of 2010, which marks an 11.3% growth in the mobile phone market despite weakened feature phone sales.

Statistics from the 2nd quarter of 2011 reveal the feature phone market shrank 4% when compared to the 2nd quarter of 2010.

The declining use of feature handsets can be mostly attributed to markets in the U.S., Japan, and Western Europe where users are quickly migrating to smartphones. That, plus conservative spending habits, resulted in the first decline in the feature phone market since the 3rd quarter of 2009 - almost two years prior.

"The shrinking feature phone market is having the greatest impact on some of the world’s largest suppliers of mobile phones," explained senior research analyst with the IDC, Kevin Restivo.

"Stalwarts such as Nokia are losing share in the feature phone category to low-cost suppliers such as Micromax, TCL-Alcatel, and Huawei."

However, Ramon Llamas, senior research analyst with IDC's Mobile Phone Technology and Trends team, was quick to emphasize the strength of the mobile market overall, despite the decline in feature phone shipments.

"For the overall market to grow by double digits year over year, despite the decline in feature phones, is testament to the strength of the global smartphone market. While this is not a new trend - smartphones have been the primary engine of growth for the last several quarters - it does mark something of a transition point, as demonstrated by the growing number and variety of smartphones featured in the vendors' portfolios."

Interestingly enough, even developing countries known for using feature phones are beginning to adopt low-cost smartphones, especially those with social networking capabilities and interests. For example, lower cost devices, including Android phones, are driving smartphone penetration in several Latin American countries.

In North America, lower prices, big hardware launches and enhanced marketing for smartphones have helped fuel the dramatic adoption of the technology. Android in particular took the lead in the United States and Canada with the help of Samsung, Motorola, HTC, and LG.