Your smartphone will be your new computer and bank. China's, too.

March 10, 2011: 2:51 PM ET

Sure, smartphones are booming, but here's how banking, enterprise and OS battles are really going to play out on the sleek gadget in your pocket.

By Mitch Cline, guest contributor

Smartphones

Wireless handsets have been around for decades, but this market has perhaps never had a more promising future than it does now in terms of potential market penetration, consumer demand, and global significance. Take mobile handset penetration: Globally, we're talking big-time numbers that are only going to get bigger. More than 1.4 billion mobile handsets are expected to ship this year—a 10% increase over last year. It's likely that within three years that number will exceed one and a half billion, according to market research firm iSuppli.

One reason for this exceptional growth potential is that the fastest growing segment of the mobile handset market is higher priced, feature-rich smartphones. These are typically sold to consumers in the $300-$600 range. Accenture (ACN), where I work, has found that ownership of smartphones among consumers in eight countries quadrupled from 8% in 2009 to 32% in 2010, while ownership of cheaper, basic mobile phones dropped by 79% in 2009 to 65% in 2010. More purchases of the more expensive smartphones—bound to keep accelerating—translates to higher profit margins for mobile handset manufacturers and more consumer uptake of more mobile handset features and applications.

In this growth market, we at Accenture have chosen seven trends, based on our industry research and analysis, and talking with top industry executives, that pinpoint where we think smartphones are going this year.

1) Smartphones all over the enterprise

Smartphones are invading the enterprise like never before. Smartphone manufacturers and chief information officers (CIOs) of enterprises need to adapt to this game-changing shift and capitalize on this trend now through strategic investments. The pressure is on to seize the opportunities this phenomenon offers.

Consumers are the main drivers of this "prosumer" movement. They want to use smartphones. Employees are urging their corporate CIOs to provide all the same work functionality that they possess in their smartphones. This prosumer trend will continue this year to redefine who the purchasers of smartphones are. The definition has broadened beyond, for example, a consumer buying a smartphone at a retail store to include CIOs and chief strategists.

As this trend continues to accelerate, CIOs will wrestle more than ever this year with security issues. With so many smartphones being used in enterprise networks the potential for cyber attacks and software viruses will grow. CIOs will have to balance the benefits of using smartphones versus the risks to securing intellectual property. Security threats will be big factors in determining which companies aggressively deploy smartphones.

2) Smartphones in China

China is a mecca for smartphones. Accenture's survey found that more than half (53%) of Chinese respondents in urban areas currently own a smartphone, which exceeds the percentage of urban consumers from the seven other countries surveyed, which were Brazil, France, Germany, India, Japan, Russia and the United States. Only one-third of U.S. respondents and only 10% of Japanese respondents indicated they own a smartphone. Smartphones are predicted to be the most purchased device in China next year, with 38% of those surveyed planning to buy one. No matter how you examine the data, China keeps coming up very high on the list of smartphone enthusiasts and will during the next year.

3) Superphones

Ever heard of a "superphone"? This year you likely will hear the term, now used in some small mobile handset circles, more often than in any previous year. Also called "app phones" in industry lexicon, superphones differ from smartphones. Exactly how is now a subject of industry debate, because a standard definition does not exist. The basic premise is that a superphone can be thought of as the next generation smartphone, boasting a more powerful chip than current generation smartphones. Superphones will have more applications, more features and more speed.

4) Mobile OS battles for supremacy: a stalemate

During this year mobile handset operating systems are becoming more numerous and fragmented, and will become more competitive than ever with traditional PC operating systems. You will hear more than ever about which mobile handset operating systems are gaining more consumer acceptance and which ones are falling out of favor. CIOs and mobile handset manufacturers will rapidly address this fragmentation out of necessity. They will make tough business and technologically sophisticated decisions about which ones to embrace and which ones to stop using.

The jury remains out about which mobile OS's will ultimately win commanding market share. This year won't provide a definitive victor, but the compe­tition is hot. Traditional PC operating systems are being challenged in new ways by legitimate and viable operating systems such as those used on smartphones. Of course, the traditional PC is not going away anytime soon. But it is being re-evaluated and is moving on a slower growth trajectory compared with other emerging operating systems, such as those running smartphones.

We predict there will be a growing demand for consumers to use smartphone operating systems, in place of desktop PC operating systems, on tablet computers. We're also likely to see the continued decline in use of older mobile OS's from feature phones and other last-gen equipment.

5) Smartphone and tablet convergence

Strategically important holes in mobile handset manufacturer's product lines will emerge this year, especially in the tablet computer arena. A growing number of smartphone manufacturers will feel pressured to introduce tablet computers, and will likely do so this year. Offering one but not the other will become an intensifying threat to their businesses, because more of their competitors will start offering both. Some 100 tablet computers have been announced already, many of which will be commercially available by the end of this year (some are already). Furthermore, during the next year tablets may start to integrate some mobile handset functions such as voice calling capabilities.

6) Payments and banking go mobile, NFC arrives

One of the fastest growing mobile handset applications this year will involve mobile payments. Look for news about smartphones that enable consumers to use their devices to pay for goods in restaurants and stores. This year smartphones will begin to replace credit cards on a global basis. Also, watch for the evolution of smartphones being used for other new monetary applications beyond mobile payments. A new Accenture mobility survey found that 79% of smartphone users would find it useful to download coupons to their phones, and 73% would like to receive instant discounts as they pass by an item in a store using Near Field Communication (NFC) technology.

7) Consumers want phones to come with embedded features

This year the use of embedded software within various types of mobile handsets will accelerate. This trend is due to consumers wanting more applications, features, functions and flexibility in their mobile phones ready to go. Some of the biggest business opportunities in the smartphone business this year will be in providing smarter, more versatile and more reliable embedded software.

--Mitch Cline is the global managing director of Accenture's Electronics & High-Tech practice. Posted with permission of Accenture, copyright 2011, all rights reserved.

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