Summary:

Smartphones weren’t expected to outsell PCs until 2012 – but in the fourth quarter they took over, and there’s no reason for them to stop. I…

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Smartphones weren’t expected to outsell PCs until 2012 – but in the fourth quarter they took over, and there’s no reason for them to stop. If Nokia (NYSE: NOK) chooses wrong, it’ll get run over.

On Friday, Nokia’s new chief executive Stephen Elop is expected to unveil a new strategy for the company – which is, let’s not forget, the biggest handset maker in the world, both for “dumbphones” (aka feature phones) and smartphones (aka internet-connected phones with browser, email and app abilities).

The expectation is that Elop will announce some sort of tieup in which it adopts Windows Phone 7 for at least some smartphones in some territories; he will either kill off or accelerate development on the MeeGo platform (an open source project with Intel) for other smartphones.

Yes, but why? Nokia sells more phones than anyone. But Elop – besides realising that the industry has been disrupted, first by Apple (NSDQ: AAPL) and now by Android (of which in his “burning platform” speech/memo he said “Google (NSDQ: GOOG) has become a gravitational force, drawing much of the industry’s innovation to its core”) – can see that it’s important to be on the front of the curve with smartphones.

Why? Because smartphones have begun to outsell PCs.

That had been anticipated – but nobody had expected it before 2012. Instead, in the fourth quarter of 2010, Gartner says about 100m smartphones were sold; that compares with 93.5m PCs sold. To triangulate, IDC says 100.9m smartphones were sold in the fourth quarter, compared to 92.1m PCs (“still the largest ever”).

Gartner says that for the whole of 2010, 296.6m smartphones were sold (“to end users”) worldwide, up from 172.4m in 2009.

That compares with a (Gartner) total of 350.9m PCs sold, up from 308.3m in 2009 – which indicates how much more quickly the smartphone market is growing if it could outsell PCs in the fourth quarter.

IDC says 302.6m smartphones for the year, up from 173.5m in 2009; compare that to 364.2m PCs sold, up from 304.8m in 2009.

In short: PC growth is slowing down, and smartphone growth is speeding up. That is being driven by “white box” phone makers in China and India, says Carolina Milanesi, the smartphone analyst at Gartner: in the past those companies would have in effect been black market sellers, but now they’ve joined the mainstream, often selling cheap Android handsets – which means they can be counted in the smartphone numbers.

All of which means what? That Nokia, which dominated the mobile phone market while that market was sailing along, is suddenly facing a market where – well, Elop is right: it’s alight. In a good way for Apple and the Android handset makers, but in a bad way for Nokia. To quote technology writer Ed Bott: “When I look at Nokia, I think of WordPerfect, another early leader from an out-of-the-way place that failed during a crucial tech transition”.

For Nokia, this is going to be a tough one. But at least it’s not having as bad a time as some of the PC makers, where the levels of profit from making PCs is barely worth the game. Smartphones still offer some profits.

And now, we await tomorrow. Though there’s also the longer-term question: will smartphones outsell PCs for this year, continuing the trend from the quarter just gone?

This article originally appeared in MediaGuardian.

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