by Matthew Carr, Investment U Research
Tuesday, February 15, 2011
These days, if someone tells you they don’t own a cellphone, that’s like them saying they don’t have electricity or indoor plumbing. That’s a measure of where modern society is at the moment.
But many people have kicked that up a notch further and have entered the smartphone world.
Globally, more than 1.6 billion smart phones were sold last year. That was a 72% increase over 2009.
And with consumers falling over themselves to get smartphones, the arena is heating up…
Smartphone vs PC… A Unanimous Winner
When it comes to the smartphone market’s big players, Apple (Nasdaq: AAPL) is an obvious one, with its iconic iPhone. But now, everyone is rushing to unveil their own, putting pressure on Apple to make its iPhone cheaper and more versatile.
The market just opened up a little more when Verizon Communications (NYSE: VZ) began pre-order online sales of its Apple iPhone. And the demand was astonishing. The country’s largest mobile operator recorded the most successful first day sales in the company’s history – over 500,000 orders. For Verizon, iPhone sales are projected to be the main driver of the 4% to 8% revenue growth the company expects this year.
But Apple has serious competition in the shape of Google’s (Nasdaq: GOOG) Android platform. In fact, Android phones stole the limelight during the fourth quarter of 2010, accounting for 53% of all smartphone sales.
Even Facebook is getting in on the act, launching its own phone in partnership with INQ - the Cloud Touch.
If you need more proof of how massive this smartphone trend is, just consider this statistic:
During the fourth quarter of 2010, smartphone sales topped those of personal computers for the first time ever. A total of 101 million smartphones were purchased, compared to 92 million PCs. In market growth terms, that was an 87% increase quarter-over-quarter in smartphone sales, versus the meager 3% increase in PC shipments
It’s even more of a beatdown to PCs considering Apple’s iPhone was only launched in 2007.
And there’s more somber news for the future of the PC market…
Having not even been on the market for one year, Apple’s iPad already accounts for 7% of the global PC market.
And in classic “monkey-see, monkey-do” style, everyone is riding Apple’s coattails in an attempt to get their own tablet computers into consumers’ hands.
It’s yet another rapidly moving trend, with Morgan Stanley (NYSE: MS) projecting that tablet sales will hit 100 million per year by 2012.
And this overall trend opens the door to secondary and tertiary markets, which are a developer’s dream and a massive boost for the smaller companies. After all, nobody would buy a smartphone just to make phone calls, send texts, or view e-mails. That’s like buying a Ferrari and then driving the speed limit. What’s the point?
So this massive smartphone market is creating a booming secondary market: mobile applications, or “apps.”
Is There an App for This Kind of Growth?
The mobile app market topped $2 billion last year, with Gartner, Inc. expecting it to generate $15.1 billion in revenue this year.
Globally, the app market is projected to increase to $27 billion by 2013, rising to $35 billion in 2014, according to International Data Corporation.
Plain and simple: That’s insane growth.
Apps range from the stupid, to the life-saving, to providing eternal salvation (seriously… you can purchase “Confession: A Roman Catholic App” for $1.99). But regardless of what apps are out there, if those projections are confirmed, that would see the global app market rocket to growth of 1,958% between 2009 and 2014.
And with the market only just hitting its stride, suffice it to say, we’re at a huge point in the technology curve.