The world's two largest cellphone makers, Nokia and Samsung Electronics Co Ltd, unveiled new phones on Monday, offering features comparable to iPhone and Pre, but at lower prices.
In the last two weeks Apple Inc's launch of an updated version of iPhone and Palm Inc's Pre model have heated up competition in the sweet-spot of an otherwise shrinking industry.
What is clear is that we are heading to one of the most competitive fourth-quarters we have had, said Gartner analyst Carolina Milanesi.
The holiday fueled fourth quarter is usually the strongest sales season for handsets and vendors launch their top models in time to reach the sales peak in October-December quarter.
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.
Samsung revamped in one go its smartphones portfolio, unveiling four new models to its Omnia range -- the Omnia II, the OmniaLITE and two OmniaPRO models, all using Microsoft Corp's Windows Mobile software.
Samsung also launched a new mass-market Jet model on Monday, which differs from some 150 phones Samsung launches per year with its full touch screen, a next-generation display and improved processor to deliver fast mobile Internet access.
The company said it will reach new, untapped markets of consumers who want smartphone functionality at a reasonable price. It did not reveal the price of the phone, but analysts said it was comparable to most mid-range models.
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.
Nokia is trying to address the very competitive mid-range space given the prices of the Pre and the new iPhone, said Gartner's Milanesi.
Nokia can also benefit from a lower contract tariff than these two devices have, which will make the products more competitive, but certainly not offering a comparable user experience.
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 because 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. I'm expecting a little less, eventually -- minus 9, minus 8, hopefully.
(Reporting by Tarmo Virki, Georgina Prodhan, Marie-France Han; Editing by Andre Grenon)