The smartphone industry will ship more than 1 billion units before the year is over, according to a preview of a Deloitte report due out next week.
And that number could actually come closer to 2 billion, at least based on Deloitte's definition of a smartphone. Most analysts and industry watchers consider a smartphone a device that runs a specific operating system, such as iOS or Android. But Deloitte has expanded that definition to consider phones "smart" if they have touch screens, use full keyboards, and run apps, regardless of what OS they run internally.
"In 2013, any full touch-screen based device, and in some markets, any device with a full QWERTY keyboard, might be described by manufacturers, presented by salespeople, or perceived by purchasers as a smartphone," the report said. "However in marketing and in stores there is no enforceable rule on what can or cannot be promoted as a smartphone, and the smartphone moniker is likely to describe an increasingly diverse range of capabilities."
Based on that definition, Deloitte expects that about one in five smartphone owners may never or rarely connect to the Internet. And there may be hundreds of millions of smartphone owners who don't use a data package. Instead, the 400 million smartphones that never or rarely hop online will be used more like traditional feature phones.
Deloitte cited several reasons, stretching across many different countries.
Often, new entry-level smartphones and higher-end but older smartphones phones offer a limited set of features. A large portion of smartphone owners may not have the interest or ability to use all of the features on their devices. Some may not understand or be able to afford the data charges. And others simply won't have access to cellular or Wi-Fi services that would allow them to use the Internet.
Smartphones have been growing in availability and popularity compared with feature phones. But much of that trend has been triggered by the lack of interest among manufacturers in creating feature phones.
"The shrinking availability of feature phones is mostly due to the fact that manufacturers, especially those with smaller scale, may not find it viable to develop their own proprietary operating system (OS) and prefer to use the available open source OSs," Deloitte said. "Some smaller manufacturers may simply find it unviable to manufacture 2G feature phones and focus on entry-level 3G smartphones instead: a third party OS could be used, and margins may be higher."
Consumers may actually spend a fair amount of money on a high-end smartphone, only to use it just for phone calls and text messages. Others may buy the phones because of their quality or their name, and not because they want to use the full range of features.
"Smartphones have been a phenomenal success and are likely to remain so in 2013," the report added. "However, while smartphones' shipments and installed base should continue to grow, they are likely to be used in different ways by different users."