Tina Teng, a senior analyst for wireless communications at iSuppli (El Segundo, Calif.) said shipments could grow by 11 percent if wireless network operators cut fees for data services and offer aggressive subsidies to reduce consumer smartphone prices. But if if consumer confidence continues to erode, growth in smartphone shipments will be closer to 6 percent, Teng warned.

Depending on the growth rate, smartphones could account for between 16.6 percent and 17.4 percent of total mobile handset unit shipments in 2009, according to iSuppli's forecast.

Overall handset sales are expected to decrease 9 percent in 2009, topping out at 1.08 billion units, according to Strategy Analytics, another market research firm. ISuppli is projecting overall handset shipments to decrease 12 percent to 1.11 billion units in 2009.

But the relative strength of the smartphone market—driven by a strong consumer appetite for gadgets like Apple Inc.'s iPhone—is projected as a rare bright spot, offering a lifeline to IC suppliers who make chips used in them.

Last month, Forward Concepts released a study that projects smartphone shipments will grow 13 percent in 2009.

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Projections of smartphone growth from various market research firms are difficult to compare because there is no standard definition of the product category. ISuppli defines smart phones as mobile handsets that use high-level operating systems, allowing them to expand their functionality via sophisticated add-on applications, such as personal information management programs, the firm said.

"With 3G networks having become prevalent all over the world, smart phones are no longer just for corporate users—they are for consumers, too," Teng said. "Consumers increasingly are demanding data-intensive applications that require the kinds of high data speeds supported by 3G networks."

With the rise of the smartphone market, Teng said, battle lines are forming around operating systems used in these devices, including Microsoft Corp.'s Windows Mobile, Symbian Foundation's OS, Research in Motion's RIM OS, Apple's Mac X OS, Palm's OS, the Google-backed Android and other Linux-based operating systems.

"Beyond the friendliness of user interfaces, the availability of a variety of applications is the key factor attracting consumer interest to smartphone products," Teng said. "Thus, different players at various segments of the supply-chain are starting to build mini-ecosystems—including applications—in order to attract consumers and gain their loyalty."

By: DocMemory
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