Smartphone mkt competition rising: Credit Suisse

BANGALORE, INDIA: Credit Suisse expects competitive pressure in the smartphone industry to increase over the next 12-18 months as a wave of low-end Android terminals enter the market and Apple Inc releases a low-end iPhone in 2012.

Apple's release of a low-end iPhone could hurt Research In Motion Ltd and Nokia, the brokerage said as it downgraded RIM a notch to "neutral" and kept Nokia's stock at "underperform."

"Apple is well positioned to gain smartphone share, aided by competitive advantages in operating system, ecosystem, brand and scale," Credit Suisse said, adding that the company's innovation advantage, strengthened by iCloud, may result in share gains with sustained margins.

The brokerage also raised its 2011 smartphone unit estimates by 7 per cent to 482 million, and its 2012 estimates by 10 per cent to 656 million units. It believes the smartphone segment will grow to 1.11 billion units by 2015.

Given the cannibalization of feature phones and weakness year-to-date, Credit Suisse cuts its 2011 estimates on handset units by 4 per cent to 1.79 billion.

Credit Suisse said Apple and Samsung Electronics would be secular share gainers in the smartphone market and sees increasing signs of vulnerability for RIM, Nokia and Motorola Mobility, which it downgraded to "underperform" from "outperform."

For RIM, while shares remain inexpensive, Credit Suisse believes the transition to the QNX operating system will be slow, with significant competition in all price segments.

"For Nokia, we see a more rapid deterioration ahead," it added.