Scary times ahead for smartphone vendors, says analyst

The rest of 2012 will be very challenging for smartphone makers as they struggle to find ways to differentiate their "black slabs," Richard Kramer, managing partner at Arete Research, said during the opening address at the Open Mobile Summit conference in London.

Smartphone sales will total between 750 million and 800 million units and add up to over US$230 billion during 2012, according to Kramer. However, Apple, Samsung Electronics and HTC are the only vendors making money, he said. "This problem is going to get worse in 2012," said Kramer. The underlying issue is that the phone vendors have a massive issue with differentiation, while new entrants are expecting lower profit margins. The mobile phone industry has in the past three years moved to making products that for the average consumer all look like flat black slabs, Kramer said. The end result is that the PC market model is coming to smartphones, according to Kramer. At the same time costs, including patent licensing and marketing, are going up for the phone vendors, which makes the current situation even scarier, he said. To save themselves, vendors are going to have to change.