The Smart Phone Market Growth Opportunity: In a Word, Huge

One of the reasons ATT is so anxious to get its hands on T-Mobile - and any other market share that comes its way - is that smartphone market share is still surprisingly small. The opportunity to grab it - and the exceedingly juicy margins that come with it compared to 'dumb' handsets - will result in exponential growth.

That, in turn, will fund lots of other opportunities related to mobile commerce and finance. The Justice Department may be technicially correct that the ATT-T-Mobile is anti-competitive (the word, "d-uh," comes to mind) but one senses that the scale of the opportunity to own the next generation of telecommunications' cash flows is a prize for which ATT is willing to fight, barter, negotiate, wheedle, whine, concede - or whatever else it takes. JL

Philip Elmer-Dewitt reports in Fortune:

ComScore released its July 2011 U.S. smartphone data this week and as usual Asymco's Horace Dediu has done the best job of turning the numbers into striking -- and insightful -- graphics. On Thursday he released three charts that show:

1. The scale of the opportunity for further smartphone growth
2. The extent to which Apple's (AAPL) iPhone and Google's (GOOG) Android are squeezing out the competition
3. The challenge Microsoft (MSFT) faces as it tries to get back into the game
I'm particularly fond of the chart at right because it gives you a sense of how large the U.S. cell phone market really is and how much room for growth it offers smartphone manufacturers.

You can see the other two charts at the Asmyco entry Dediu has titled The third smartphone ecosystem: What are the odds?

The third ecosystem, of course, is Microsoft's Windows Phone 7, which many analysts believe could capture the lion's share of the blue sky in the graph above.

Dediu is skeptical. He writes:

In the last 12 months, Android gained 25 million users in the US. iPhone gained 9.5 million while Blackberry lost 3.2 million and Microsoft lost 1.6 million. Other platforms had a net loss of 1.2 million.

The total net gain of smartphones was about 29 million new users.

RIM switched from being a consistent net gainer of users to a consistent net loser of users in October 2010. Windows Phone is showing signs of holding the line on user base erosion but share remains below 5% (now at 4.7% vs. 4.6% last month).

To put the mountain-sized hurdle in perspective, Android now has 7 times more users in the US while iPhone has about 5 times more. To become the largest mobile platform in the US, as some analysts are predicting, Microsoft has a 12:1 disadvantage that looks to continue to grow.

Those are some pretty tough odds.