Although the global handset market is mature, smartphone growth appears to be growing faster than expected, according to the latest data from Gartner. Raymond James analysts Tavis C. McCourt and Daniel Toomey issued a report with their analysis of that data and how it affects key handset suppliers Apple Inc. (NASDAQ:AAPL), BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) and Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V).
Smartphone shift accelerating
The analysts said originally they expected smartphone growth to slow to 25 to 30 percent this year. However, they revised their estimates upward to 36 percent after the first quarter. They increased their 2013 estimated smartphone growth to 43 percent, noting that more than half of all handsets sold around the globe are smartphones for the first time. Year over year, smartphone volumes have grown 47 percent.
“The transition from feature phones to smartphones in China due to extremely aggressive pricing has occurred more precipitously than we imagined,” the analysts wrote.
Growth in China peaking this year?
One of the concerns investors have been watching with Apple Inc. (NASDAQ:AAPL) in particular deals with its push into China. However, the company might miss its opportunity if it doesn’t strike soon. The analysts report that although smartphone market growth in China rose 101 percent year over year during the second quarter, it may slow down significantly by next year.
They note that 72 percent of the handsets sold in China during the quarter were smartphones. North America hit that level only two quarters ago, while Western Europe hit it just last quarter. So as China pulls forward smartphone demand into this year, the analysts said penetration rates will probably result in smartphone growth to slow to between 10 and 20 percent in China next year.
Apple’s efforts in Asia Pacific, Europe
However, one good bit of news for Apple Inc. (NASDAQ:AAPL) is that average selling prices for smartphones in China could be going up as the country transitions to LTE networks. The analysts said India and Latin America will probably be the main growth drivers for smartphones after this year.
Apple Inc. (NASDAQ:AAPL)’s smartphone growth is still in the double digits globally and in every region except the Asia Pacific region and Western Europe. The analysts believe that the new low cost iPhone “will be crucially important at reinvigorating growth in these regions.”
BlackBerry needs plan B, Nokia pulling out ahead
The analysts also note that all seems lost for BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB). The company “left it all on the table” during the second quarter of the year. The BlackBerry Z10, Q10 and Q5 were just not as successful as the company had hoped. According to the latest data, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s volumes fell 23 percent globally and 24 percent in emerging markets year over year. Of course the company’s board is now looking into other strategic options, whether that involves a buyout or something else.
Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V), on the other hand, is taking advantage of BlackBerry’s weakness right now. However, Raymond James analysts believe this “may not mean anything.” They note that Windows Phone has taken the third place position from BlackBerry when it comes to operating system market share.
During the second quarter, Windows Phone increased its market share to 3.3 percent from 2.9 percent quarter over quarter. Meanwhile BlackBerry’s market share fell to 2.7 percent from 3 percent in the previous quarter. Nokia’s shipment volumes were down during the quarter though, falling 40 percent year over year to 7 million, not including the company’s Asha phones. That’s compared to 11.7 million in the second quarter of last year.
Nokia’s overall handset volumes fell 27 percent, and the analysts remain concerned about the company’s ability to get back into the game. “Outside a decent sequential growth trend for Lumia sales in the Middle East / Africa, there remains little evidence of meaningful momentum as of yet in Nokia’s handset turnaround strategy,” the analysts wrote.