Can the smartphone save Europe?

If you accept the words of financial economists--which might mean a considerable stretch, then Europe is appearing to show the first signs of a recovery.

But does this mean anything for the mobile phone industry as businesses and consumers continue to search for ways to reduce their expenditures? It would appear not if you're a vendor of traditional handsets, as shipment volumes continue to slide downwards--albeit at a reduced rate, from earlier this year.

But, there might be that vital spark of hope if you happen to be a supplier of smartphones. Their glitzy features and functions have boosted their uptake by a very healthy 25 per cent in Q2/09 when compared to the same period last year.

OK, the volumes are still small beer when matched against more conventional phones, with 8.8 million smartphones shipped in Q2/09 against over 33 million of the more unadventurous kind.

This seemingly unstoppable shift to ‘fancy phones' has also negatively impacted the Scandinavian phone makers, while the Korean manufacturers have benefited from this burgeoning trend. According to IDC, for the first time Samsung and LG together shipped more devices to Western Europe than Nokia. Nokia continues to be the market leader, with over 36 per cent of the market, but the gap to Samsung, the second biggest vendor with nearly 29 per cent market share, continues to diminish. On the other hand, LG continues to challenge Sony Ericsson's market position, and the success of its touch screen handsets allowed LG to get 11.5 per cent market share, the highest ever in Western Europe.

With Nokia on the ropes with its muddled services and handset strategy, and Sony Ericsson in a near-permanent state of identity crisis, is this growing presence of Asian handset vendors now inevitable?

So, while European operators might start to see their data ARPUs increase as smartphones reach a wider audience, handset vendors based in this region might see the reverse, losing out to more astute Asia/Pac vendors with lower cost R&D and manufacturing. -Paul