Mobile apps to top 2 million, 500 million sub-$100 smartphones in use this year, firm says

While technology enthusiasts look forward to a number of high-end smartphone announcements vendors are preparing for Mobile World Congress next month, 2012 will see entry-level smartphones become more popular than ever. Market research firm Deloitte estimates that the number of sub-$100 smartphones in use globally will surpass 500 million this year, and by the end of 2012 there will be 200 million NFC-equipped devices in the hands of consumers. The firm also sees apps continuing to play a huge role in the mobile market, with the number of available apps set to top 2 million later this year. “The number of apps available reached one million in December 2011 and will double again by the end of 2012,” Deloitte TMT analyst Jolyon Barker said in a statement. “However, the proportion that are paid for remains small. Only a fifth of downloaded apps sell more than 1,000 copies and only a tiny proportion of unpromoted apps will ever become successful.” The firm’s full press release follows below.

Deloitte analyses top trends for the telecoms industry for 2012

17 January 2012

  • The number of £65 “smartphones” in use will reach 500 million.
  • The number of apps available will surpass two million by year-end 2012, double the total as of December 2011.
  • The volume of data sent between devices via short-range wireless connections, bypassing the Web, will double in 2012.

The Technology, Media and Telecommunications (TMT) practice at Deloitte today announces its predictions for the telecoms sector in 2012, forecasting that the over half a billion low-cost smartphones (costing less than $100, or £65) will be in use by the end of 2012.

Jolyon Barker, global lead for Deloitte’s Technology, Media and Telecommunications Industry, comments: “This year’s predictions cover a range of topics, including the future for apps, demand for data and the rise of devices with near-field communications technology.

“The number of apps available reached one million in December 2011 and will double again by the end of 2012. However, the proportion that are paid for remains small. Only a fifth of downloaded apps sell more than 1,000 copies and only a tiny proportion of unpromoted apps will ever become successful.”

Simon Kerton-Johnson, lead telecoms partner at Deloitte, adds: “The number of devices with embedded near-field communications technology is set to soar to 200 million by the end of 2012. NFC – the transfer of small amounts of data over a very short distance – has been dominated by the ‘wave and pay’ notion of embedding a credit card into a mobile phone but the application of the technology is likely to have a wider reach.”

The $100 (£65) “smartphone” reaches its first half billion

Smartphones are typically considered high-end devices; yet by year-end 2012, at least 500 million $100 (£65) “smartphones” will be in use. These devices will have the look and feel of smartphones, sporting touch screens or full qwerty keyboards. $100 smartphones will have weaker processors, less memory, slower connectivity options, lower resolution cameras – but purchasers of these devices will be happy to trade off lower specifications for lower price. The rise of the $100 (£65) smartphone is comparable to the growth of the netbook, which offered a low-cost and low-powered alternative to standard laptops. The biggest demand for $100 smartphones is likely to be in emerging markets where Internet access is low but the desire for communication and information services is growing. Yet, the $100 (£65) smartphone could also appeal to users in mature markets where it could become a perfect teenage ‘starter’ phone. This will put pressure on the supply chain to cut the price of components but also presents a challenge for app developers as low-cost smartphone owners are less likely to want to pay for downloads.

So many apps – so little to download

The demands on the developer are increasing as the variety of smartphones and tablets increases. To reach a global target market, a developer may have to make 360 different variants which has almost called time on the part-time app developer. With so much choice on offer, app-store providers should consider ways to improve and assure the quality of the products on offer. Stores should look to differentiate by considering subscription models focused on different genres, or selected by editors, that would create ‘app bundles’. As smartphones go truly mass market, there will be a growing demand for local language, local content apps.

Web Bypass: delivering connectivity without the internet

The strain on networks, both fixed and mobile, is set to force more people to turn to short-range wireless connections to transfer data. Such technology has been pervasive before in the form of infrared and Bluetooth connectivity and is set for a resurgence in the form of web bypass – cutting out the need to connect to the internet at all – as the need for the quick transfer of data between devices and users grows. Roughly one per cent of all wireless data exchanged in 2012 will be between devices rather than routed over the internet, double the level of 2011. With telecoms companies balancing the need to invest in network improvement with the demands of customers for data capacity, web bypass will emerge as a third network option alongside fixed broadband and mobile for transferring information.

NFC and mobile devices: payments and more!

Many people remain uncomfortable with the notion of using a phone to pay for items and consumer perception about the security and battery-draining aspects of NFC need to be overcome. Even if 2012 turns out to be no more than a “transitional year” for mobile payments, the NFC chips will not go to waste. There are thousands of applications of NFC – from gambling, to games to healthcare – that could build up a head of steam over the course of the year, even if the media continues to focus on the ‘digital wallet.’

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