Gartner: Smartphone Market Faces Growth - TheStreet

EGHAM, U.K. (

TheStreet

) -- With

Apple

(AAPL) - Get Report

,

Nokia

(NOK) - Get Report

,

Palm

(PALM)

and

Research In Motion

(RIMM)

all

scrambling

for market share, the cell phone market will return to growth next year, but the days of booming sales are over, says technology research firm

Gartner

.

"Despite a projected return to growth in 2010, the times of 20% growth are certainly over as mature markets are saturated and most growth will come from emerging markets," Carolina Milanesi, research director at Gartner, explained in a statement. "Software, services and content will be much bigger drivers than hardware."

After flat growth in 2009, smartphone sales are expected to jump 9% next year, driven largely by burgeoning markets such as China and Russia. These places, however, pose major challenges for established handset makers.

See Cramer's Mobile Internet Tsunami stocks>>>

In these countries, Gartner expects significant growth in the "grey market," where manufacturers make phones that aren't recognized or licensed by government regulators. Lacking a valid International Mobile Equipment Identity (IMEI) number, these grey market phones, also known as "white label" phones, are big business.

Analyst firm

iSuppli

estimates that Chinese grey market shipments will grow to 145 million units in 2009, accounting for almost 13% of the global cell phone market.

"Today, grey market sales are no longer limited to China," added Milanesi. "All manufacturers will have to compete with grey-market players as they expand into emerging markets in Asia/Pacific, Eastern Europe, the Middle East and Latin America."

Milanesi explained that with lower selling prices, grey market phones could have the biggest impact on Nokia's market share.

The Finnish phone giant has seen steady

erosion

of its market share as it faces stiff competition from Apple's iPhone and

Google

(GOOG) - Get Report

Android devices such as

Motorola's

(MOT)

Droid.

Gartner predicts that smartphones will account for 14% of all mobile device sales in 2009, growing 23.6% from 2008. By 2013, the analyst firm expects that smartphones will make up 38% of the overall market.

-- Reported by James Rogers in New York

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