Smartphone market a popularity contest, say tech analysts

Photo Credit: Bloomberg , Getty Images

Most respondents said they would be purchasing a smartphone, with iPhone being the top choice (18%) followed by Blackberry (10%) and Android and Windows 7 both at 8%. 12% said they would be be buying just a regular cell phone while forty-four per cent of respondents said they wouldn’t buy any of those devices.

That doesn’t surprise technology industry analysts.

“Broadly speaking, sales of smartphones are not at all like sales of computers or paper clips,” explains Duncan Stewart, director of Deloitte Canada Research in the areas of technology, media and telecommunications. “There is a big element of fashion when it comes to these devices.”

“There is definitely a cool factor,” adds Peter Wolchak, editor of the business technology magazine, Backbone. “It’s like in high school, where some kids try really hard to be cool while others just are cool. Apple has that intangible coolness.

“There are very few devices now that will impress people when you pull them out of your pocket. Apple can do that, Research in Motion (RIM) can’t. No one is impressed when you pull out a Blackberry. This cool element is not rational or substantive, but it drives sales.”

Timing is critical

Fashion is not the only factor in smart phone sales. Timing is also important.
Stewart says that, in Canada and the United States, the iPhone now has momentum in the product cycle while Blackberry is just starting to introduce new things.
“Phones have different update cycles, and that has a big effect,” he adds.

“Smart phones come out in a six-month cycle. This is not the way it works with refrigerators.”

Wolchak also attributes the iPhone’s success to the Apple “ecosystem,” which provides a wide range of services and features ranging from a music store (iTunes) to GPS applications.

“Anything that can be done on a smart phone can be done on an iPhone,” he says, adding that Apple has about 425,000 apps. “The smartest marketing slogan is, ‘There is an app for that.’ It’s actually true.

“You buy into all that when you buy an iPhone.”

RIM’s efforts on that front have paled in comparison. Wolchak notes that RIM launched a music store a couple of months ago but didn’t really market it.

“RIM is not launching it as a serious competitor to iTunes. The music store was added so that analysts going through their checklist could say RIM has one.”

Will the iPhone be king of the hill next year at this time? Not necessarily.

“iPhone sales were soaring but have flattened over the last several months and will likely continue to stay fairly flat,” says technology blogger Matthew Miller.

“RIM sales should increase when QNX (real-time operation system) devices launch in 2012. I see the gap between the two narrowing in the next year.”
Stewart agrees. “Blackberry is introducing new things that could cause the gap to narrow,” he says.

Of course, both Apple and RIM will have to contend with several upstarts.
Eight per cent of respondents said they would like purchase an Android, and the same number said they would likely pick a Windows Phone 7.

“Overall, it’s something of a popularity contest,” says Stewart. “It’s like, who is popular in the school? Who has the most friends? Who is getting the most signatures in his yearbook? It’s really interesting to watch this market.”

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