Of the 263m new handsets sold in Europe in 2008, 14% were smartphones. These 36m units accounted for roughly 24.4% of all smartphones sold globally that year. Along with North America and some Asian countries, Europe's smartphone market is the most advanced in the world. But like these others, the “Old Continent” has seen overall handset sales suffer as a result of worsening economic conditions. In fact, we expect handset unit sales in Western Europe (WE) to fall 20% in 2009; the situation is even worse in Central and Eastern Europe (CEE), where new handset sales are expected to fall 25% this year. Within the handset market, however, the smartphone segment to date has suffered less from the recession. While vendors and operators are still seeing growth in smartphone sales in Europe despite the recession, more can be done to minimize its impact and to position smartphones for post-recession growth.
Although the economy has been in recession for a while now, smartphone vendors and operators should not aim to merely survive the hard times. Rather, smartphone market players should implement strategies that are more likely to maintain sales volume during the downturn and expand business once the economy improves. We believe that operators must remain active participants in the smartphone market if their data networks are to thrive in the long run and that their main weapon in this battle is their data services pricing. For the vendors, the choice between margins and volume is less complicated: Recessions are opportune times to build market share. We believe that in order to minimize the effect of the recession and to position themselves for post-recession growth, European smartphone market participants should adjust prices to reflect both shrinking device budgets and currency fluctuations in individual markets, focus on application innovation and promote adoption of advanced data services that require smartphones.
This report examines the impact that the economic downturn will have on European smartphone sales in the short and medium term, offering guidance to smartphone market participants on how to mitigate the effects of the economic slump and prepare for post-recession growth in Europe. It provides Pyramid Research's five-year forecast on smartphone adoption in Europe and examines in more detail the market-positioning strategies of the leading smartphone vendors: Apple, Nokia and Research in Motion (RIM).
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