Smartphones: RIM reaps consumer market, Palm skidding

The smartphone market in North American is in flux, with Research In Motion Ltd. rapidly gaining ground by successfully crossing over into the consumer market from its traditional enterprise role.
RIM has grabbed market share while competitors struggle with products and channels.
One year ago, according to recent ABI Research market data, Palm Inc.’s 33% share of the market equaled RIM’s. But RIM has surged to 44% share in the second quarter of this year compared with the year-ago quarter, while Palm has slid to 24%.
“RIM has successfully crossed over into the consumer market with handsets such as the Pearl,” said analyst Shailendra Pandey at ABI. “But as smartphones overtake PDAs, Palm has stumbled. They’ve been slow to introduce new devices.”
RIM will find it difficult to sustain its current position, however, while Palm must stop further share erosion, according to the analyst.
Drivers in the North American market include the marketing of converged devices to American consumers and vendors’ pursuit of higher margins and average selling prices through smartphone sales, according to the ABI analyst. To reach consumers, vendors have been driving down the price of their smartphone offerings, juicing up sales.
Motorola Inc. ranks third in smartphone sales in North America on the strength of its Q device at Verizon Wireless and Sprint Nextel Corp., but sank to 11% of the market from 15% in the year-ago quarter. That may be a sign that the company’s original Q model needs refreshing-the new Q Music 9m, aimed at a youthful demographic hungry for music and messaging, launched this week at Verizon Wireless. Other carrier deals for a variant of the updated Q are expected.
Nokia Corp. is No. 4 in North America at 6.5% market share, down from 8% in the year-ago quarter. The decline was the least of the major vendors that trail RIM, and Pandey credited that progress to some traction in Nokia’s attempts to sell its high-end devices through alternative channels such as its own flagship stores. Globally, Nokia is the leading smartphone vendor with more than half the market.
The share losses by its North American contenders have given RIM, which has steadily rolled out new devices, an opportunity to cement its dominance of the North American smartphone market, according to Pandey.
Meanwhile, the number of smaller players in the smartphone market has increased. That reflects the push that Samsung Electronics Co. Ltd. has made with its BlackJack handset, the success of a variety of devices from HTC Corp. and efforts from Sony Ericsson Mobile Communications, which also is building alternative channels while working to meet the needs of top-tier carriers in the United States, the analyst said.
“HTC is definitely one of the rising players in smartphones,” Pandey said, “especially as it pursues establishing its own brand here, as well as offering carrier-branded models.”
The upcoming 700 MHz auction, which opens a door for unlocked device sales independent of carrier offerings, may boost Nokia’s and SEMC’s fortunes in the U.S., the analyst said.