Slowing growth rates for smartphones already are apparent. In 2005, Windsor says, consumers bought some 50 million smartphones, more than double the number purchased in 2004. In 2006, unit sales doubled again to north of 100 million units. In 2007, he reckons sales will hit about 144 million -- still healthy growth, but nearly two-thirds off the preceding years' rates of growth. In 2008 and 2009, the rate of growth will slow even more, Windsor predicts.
David Carey, head of Portelligent, a consultancy that specializes in tearing down gadgets like wireless phones to estimate their materials costs, says the more likely cost driver in smartphones over time won't be graphics chips, but flash memory. "If you took all the memory out of an iPhone and compared its insides to a Nokia N95, you'd have roughly the same cost of components," he says "The component content that is most in demand is flash chips. If everyone starts chasing the iPhone, then the costs will go up, but that will be driven more by flash."
Indeed, smartphone makers already are boosting the amount of flash memory in their gadgets. Apple eliminated its 4-GB iPhone, to offer just the 8 GB version, and 8 GB versions of Nokia's N95 and N81 are expected this week. Within a year these same phones could be sporting 16 GB, Carey says.