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iSuppli: Smartphone sales could grow 11% in 2009

March 4, 2009: 9:34 AM ET

iSuppli smartphone sales 2009There's good and slightly less good news for Apple (AAPL) in a report issued by iSuppli on Wednesday.

Against a backdrop of slowing sales growth in the overall mobile handset market, the El Segundo, Calif.-based research firm sees a bright spot in smartphones.

The report offers two scenarios for 2009 and beyond. Its best-case forecast calls for global smartphone unit shipments of 192.3 million units in 2009, up 11.1% from 173.6 million in 2008.

Its more pessimistic outlook calls for growth of only 6% this year, or 183.9 million units.

"ForĀ  the optimistic scenario to come to fruition, wireless network operators must cut fees for data services and offer aggressive subsidies to reduce consumer smart phone prices," said Tina Teng, an iSuppli senior analyst. "Furthermore, wireless operators and handset brands have to sell consumers on the value of smart phones to encourage customers to upgrade."

For the pessimistic scenario to prevail, consumer confidence -- and spending -- just has to keep going the way it's headed.

iSuppli defines a smartphone by its high-level operating system, and includes phones that run Apple's iPhone OS, Microsoft's (MSFT) Windows Mobile, Nokia's (NOK) Symbian, Research in Motion's (RIMM) BlackBerry OS, Google's (GOOG) Android, Palm (PALM) OS and other Linux-based systems.

By this definition, iSuppli estimates that smartphone sales in 2009 will account for somewhere between 17.4% (optimistic scenario) and 16.6% (pessimistic) of the total handset market.

And what determines which brands do best?

"Applications are everything," according to iSuppli. "Beyond the friendliness of user interfaces, the availability of a variety of applications is the key factor attracting consumer interest to smart phone products," writes Teng. "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."

Teng notes that Microsoft's launch of MyPhone, Nokia's Ovi and the Android Marketplace each represents a different approach to building these ecosystems.

What she doesn't mention is that Apple, with more than 20,000 apps and an installed base of better than 17 million iPhones, has a big head start.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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