As mobiles get more sophisticated, they will continue to be used for more purposes, but they will not fully eclipse other handheld devices, says IDC.
Flint Pulskamp, program manager of IDC's wireless semiconductors division, said in a teleconference Thursday the growing trend of connectivity in mobile phones is making a significant impact on the connectivity semiconductor industry.
Pulskamp listed several factors bolstering this increased connectivity. One is the increased consumer demand for creating and sharing multimedia content from device to device, which increases data traffic on networks.
Another factor is the declining cost of mobiles and higher-end components that are now inexpensive enough to be placed in more basic models, he said.
The cost is driven down by manufacturing economies of scale and integrating different components onto semiconductors, which helps reduce supply chain complexity, said Pulskamp.
"Because of cost competitiveness in the market, a lot of top semiconductor providers have taken aggressive approaches to integrating the chips--they're starting to combine the circuitry onto a single die, which not only saves on cost but also precious phone real estate," he said.
Such "combo" chips as a percentage of all connectivity options are expected to grow from 20 percent in 2007 to over 60 percent in 2012, Pulskamp added.
And cheaper components means functions such as cameras and connectivity chips like Wi-Fi and Bluetooth now find themselves on more basic models, further helping to perpetuate the sharing of content, he noted.
On connectivity chips, Pulskamp said Bluetooth still has the greatest market penetration. FM radio chips are also readily integrated because of their low cost, and are popular in emerging countries such as India and those in South America, he said.
Pulskamp said that while Wi-Fi integration is gaining in popularity, this is blunted by the chipsets' cost and power-hungriness. Wi-Fi on mobiles is expected to gain critical mass as the chipset costs decline--expected to fall 30 percent by 2012--and mobile Web applications gain in popularity, he qualified.
However, the jury is still out on how much impact GPS chips will make. "While there has been a lot of discussion around GPS, with mobile phones taking over standalone devices, there are some limitations [around the latter], such as the form factor in the small LCD screen size.
"We anticipate there will be room for both markets, amid a growth in GPS in mobiles," said Pulskamp.
The market for other handset devices will exist to help cover areas mobiles cannot, he said, offering examples such as MIDs (mobile Internet devices) and digital still cameras, which at present offer better experiences over mobiles on functions like browsing and taking pictures, respectively.
Jeff Janukowicz, research manager, hard disk drive components and solid state disk drives at IDC, said during the same conference, IDC expects a boom in the SSD (solid state drive) market from now till 2010, growing at a compound annual growth rate (CAGR) of 85 percent.
Although SSDs have garnered attention for being "greener", consuming lower power than traditional rotating hard disks, so far SSD cost has been prohibitive. The devices have earned a nasty reputation for being less reliable, too, he added.
Taking into consideration the overall storage market, SSDs will still stay a very small fraction of it come 2010, he said.
IDC said in a recent conference, SSD shipments will hit about 28 to 32 million units in 2010--small, compared to hard disk drive shipments which are predicted to hit 600 million units.
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