Sales of smartphones will exceed 420m devices in 2011, accounting for almost 28 per cent of the entire global handset market, according to IMS Research. With the introduction of more affordable, entry-level smartphones, the analyst predicts that annual sales will surpass 1bn devices by the end of 2016, accounting for one of every two mobile handsets sold.

Alongside the bullish forecasts, however, comes a note of caution from Josh Builta, an analyst in IMS’ Mobile Technologies Group. He says: “Despite the higher margins for smartphones, and the seemingly insatiable consumer appetite for converged devices, it is clear that not all OEMS are equally positioned to capitalize on this market trend. For instance, LG, despite being the third largest OEM in the world, has offered a fairly limited smartphone portfolio in recent years, a factor that resulted in the company reaching less than a three per cent share of the total smartphone market in 2010.”

Built also cites Nokia’s smartphone problems, which saw the Finnish handset-maker  drop the Symbian platform in favour of Microsoft’s Windows Phone OS. In Q2 2011, Nokia reported smartphone sales fell to 16.7m, down 34 per cent from the same period in 2010.

“Clearly one of the key dynamics of the mobile handset competitive environment in recent years has been the inability of many traditional market leaders to recognize and adjust to the growing smartphone tier,” Builta continues. “The reasons for these failures vary, and include everything from poorly designed and manufactured devices, unsatisfactory user interfaces, and portfolios that don’t offer products with a differentiating feature. These lapses have created opportunities for newer entrants to the market, which they have aggressively pursued.”

IMS points out that in recent years, no company has flourished in this environment as much as Apple. But it adds that Apple is not the only handset maker enjoying. Of the traditional handset manufacturers, Samsung has performed best, increasing its market share from around 3 per cent  in Q1, 2010 to over 13 per cent in Q2, 2011. At the same time smaller, dedicated smartphone vendors such as HTC have seen their position rise dramatically.

Builta believes these companies are well positioned to benefit from the projected growth of the smartphone market in the future. “Though the other OEMs are stepping up their efforts in the space, companies such as Apple, HTC and Samsung have a considerable amount of momentum. Catching them will not be an easy task,” he coincludes. 

IMS examines and tracks quarterly handset and smartphone market shares in its Mobile Handset Market Intelligence Service & Database. Access to the database include the Quarterly Market Report, which offers subscribers additional insight and analysis on recent developments in the mobile handset market.