The world's two largest cellphone makers, Nokia and Samsung, unveiled new phone models on Monday, 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 sweetspot of the otherwise shrinking industry.
The cellphone market volume is expected to fall about 10 percent this year as recession dampens consumer demand, but the market for so-called smartphones is expected to rise 10 percent to 20 percent, boosted by new and attractive models from many of the top vendors.
Consumer demand for more capable devices seems to be accelerating despite the general economic doom and gloom, said Ben Wood, a research director at CCS Insight.
Samsung and Nokia are playing smart by offering these sorts of products at punchy price points, Wood said.
Top cellphone 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 did not reveal the price of the phone, but analysts said it was comparable to most mid-range models.
Samsung called its new phone smarter than a smartphone, but noticed it could not officially be 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's Wood said.
RAYS OF LIGHT
The cellphone industry saw its worst-ever quarter in January-to-March, with the market shrinking 14 percent from a year ago, and Nokia reporting its first-ever quarterly pretax loss.
Several companies and analysts have said the worst could well be over for the industry as the fall was partly caused by retailers selling stockpiles of older phones, but only a few have seen any improvement in demand.
The head of sales and marketing at Samsung's mobile unit said he was hopeful phone sales would fall 8 percent to 9 percent this year across the industry, slightly less than the company's official expectation of a 10 percent drop, as the global economy begins to recover.
In the second half ... I do not see any special surge in demand. However, there is a small sign of recovery of the general economy. Hopefully, the mobile industry also will recover some, Lee Donjoo told Reuters in an interview.
Currently, we're focusing on around 10 percent lower, he said. I'm expecting a little less, eventually -- minus 9, minus 8, hopefully.
(Additional reporting by Georgina Prodhan in London and Brett Young in Helsinki; Editing by Maureen Bavdek)