Reality Check: Seven trends to track in mobile handset market

Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
Wireless handsets have been around for decades, but this market has perhaps never had a more promising future than it does now in terms of potential market penetration, consumer demand and global significance. Take mobile handset penetration: Globally, we’re talking big-time numbers that are only going to get bigger. More than 1.4 billion mobile handsets are expected to ship this year – a 10% increase over last year. It’s likely that within three years that number will exceed one and a half billion, according to market research firm iSuppli.
One reason for this exceptional growth potential is that the fastest growing segment of the mobile handset market is higher priced, feature-rich smart phones. These are typically sold to consumers in the $300-$600 range. Accenture has found that ownership of smart phones among consumers in eight countries quadrupled from 8% in 2009 to 32% in 2010, while ownership of cheaper, basic mobile phones dropped from 79% in 2009 to 65% in 2010. More purchases of the more expensive smart phones – bound to keep accelerating – translates to higher profit margins for mobile handset manufacturers and more consumer uptake of more mobile handset features and applications.
In this growth market, we at Accenture have chosen seven trends, based on our industry research and analysis, and talking with top industry executives, that pinpoint where we think smart phones are going this year.
1. Smart phones invading the enterprise
Smart phones are invading the enterprise like never before. Smart phone manufacturers and chief information officers of enterprises need to adapt to this game-changing shift and capitalize on this trend now through strategic investments. The pressure is on to seize the opportunities this phenomenon offers.
Consumers are the main drivers of this “prosumer” movement. They want to use smart phones. Employees are urging their corporate CIOs to provide all the same work functionality that they possess in their smart phones. This prosumer trend will continue this year to redefine who the purchasers of smart phones are. The definition has broadened beyond, for example, a consumer buying a smart phone at a retail store to include CIOs and chief strategists.
As this trend continues to accelerate, CIOs will wrestle more than ever this year with security issues. With so many smart phones being used in enterprise networks the potential for cyber attacks and software viruses will grow. CIOs will have to balance the benefits of using smart phones versus the risks to securing intellectual property. Security threats will be big factors in determining which companies aggressively deploy smart phones.
2. Smart phones in China
China is a mecca for smart phones. Accenture’s survey found that more than half (53%) of Chinese respondents in urban areas currently own a smart phone, which exceeds the percentage of urban consumers from the seven other countries surveyed, which were Brazil, France, Germany, India, Japan, Russia and the United States. Only one-third of U.S. respondents and only 10% of Japanese respondents indicated they own a smart phone. Smart phones are predicted to be the most purchased device in China next year, with 38% of those surveyed planning to buy one. No matter how you examine the data, China keeps coming up very high on the list of smart phone enthusiasts and will during the next year.
3. Super phones
Ever heard of a “super phone?” This year you likely will hear the term, now used in some small mobile handset circles, more often than in any previous year. Also called “app phones” in industry lexicon, super phones differ from smart phones. Exactly how is now a subject of industry debate, because a standard definition does not exist. The basic premise is that a super phone can be thought of as the next generation smart phone, boasting a more powerful chip than current generation smart phones. Super phones will have more applications, more features and more speed.
4. Mobile OS battles
During this year mobile handset operating systems are becoming more numerous and fragmented, and will become more competitive than ever with traditional PC operating systems. You will hear more than ever about which mobile handset operating systems are gaining more consumer acceptance and which ones are falling out of favor. CIOs and mobile handset manufacturers will rapidly address this fragmentation out of necessity. They will make tough business and technologically sophisticated decisions about which ones to embrace and which ones to stop using.
The jury remains out about which mobile OS’s will ultimately win commanding market share. This year won’t provide a definitive victor, but the compe