Can smartphones reverse handset declines?

Outside of the top five handset makers, China’s ZTE sold 10 million devices in the quarter, of which 2.5 million were CDMA handsets, more than the entire number of CDMA devices shipped throughout 2008. Of the 10 million, the equipment vendor sold 68% in markets outside of China. Taiwan-based HTC sold 2.4 million devices in the quarter, down by 35% from the previous quarter and nearly 8% since this time last year.

While the handset market may not have hit the bottom yet, a silver lining of replacement markets, including for mobile phones, is that there has to be a floor, Rubin said. The phone has become a necessity of modern life, so while consumers may cut back on the amount they spend on a device or plan, they will not forego the handset.

“There is only so far the market will dip, and we continue to see smartphones grow in terms of share,” Rubin said.

"We are seeing some consumer acceptance of not only rich-client capabilities but significant monthly data fees that accompany those capabilities. It bodes well, and as we see more consumers into the market that expect access to the Internet and Internet resources on the go, they will be more inclined to allocate budget for mobile data."