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NEWS UPDATES 30 August 2010

Smartphone sales to fuel Asian markets

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Mobile communication companies are set to manufacture ever-cheaper handsets, a new report says the region will be a hotbed for smartphones in the future.

Asia-Pacific smartphone growth is expected to skyrocket in the next five years. Frost & Sullivan, an industry research firm said in a recent report, as many as 54 percent of all devices sold in the region will be smartphones, up from 5 percent in 2009.

Smartphone sales in Asia-Pacific are rapidly increasing in all markets, as developed markets such as Japan and South Korea switch from feature phones to smartphones, while operators in emerging markets are pushing smartphones to lure users to upgrade from 2G to 3G service. Mobile social networking is a big reason for smartphones' popularity.

"Smartphones are critical to every operator's mobile broadband business, as ARPU (average revenue per user) typically increases by 25 percent to 100 percent after buying a smartphone depending on the market," said Frost & Sullivan manager Marc Einstein.

Mr Einstein said the report highlighted the fact that data usage from smartphones would generate an estimated US$38 billion for operators in Asia-Pacific, up from US$1.3 billion in 2009.

Despite the massive growth in smartphone sales, impediments remain. According to Einstein, "Some 80 percent of Asian mobile users use prepaid cards, and in many markets it is as high as 97 percent, making smartphone subsidies impossible for most users. Furthermore, there is a lack of public WiFi, particularly in emerging markets, which has been a smartphone saviour in the US and other developed markets."

Device sales are stagnant in most markets so smartphones are a boon for vendors. "Only raw developing markets are seeing double-digit increases in device sales, and with flat or negative growth in many markets, smartphone sales are filling this gap."

He estimates that 477 million smartphones will be sold in Asia-Pacific in 2015.

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