The world's two largest cell phone makers, Nokia and Samsung, unveiled on Monday new phone models, offering features comparable to iPhone and Palm's Pre, but at lower prices.
In the last two weeks Apple's launch of an updated version of iPhone and Palm's Pre model have heated up competition in the shrinking industry.
The cell phone market volume is expected to fall around 10 percent this year as recession dampens consumer demand, but the market for so-called smartphones is seen still rising 10-20 percent as consumers look for capable devices.
Consumer demand for more capable devices seems to be accelerating despite the general economic doom and gloom, said Ben Wood, research director at CCS Insight.
Samsung and Nokia are playing smart by offering these sorts of products at punchy price points, Wood said.
Top cell phone maker Nokia launched three new handsets on Monday, including a new touch-screen model the 5530 Xpressmusic, which would sell for 199 euros ($280) before subsidies and taxes, starting next quarter.
Samsung unveiled on Monday its Jet model, which features full touch screen, a next-generation display and improved processor to deliver speedy mobile Internet access.
Samsung called its new phone smarter than a smartphone, but noticed it could not be officially considered a smartphone because it lacked the open operating system defining the category.
Consumers really don't care about the software platform or operating system -- they just want a capable device at a punchy price that lets them do the things they want to do whether that is listen to music, take pictures or update their status on Facebook, CCS' Wood said.
(Additional reporting by Brett Young in Helsinki and Georgina Prodhan in London)