Smartphone consumers opt for "cheap chic"

By Tarmo Virki, European technology correspondent

HELSINKI (Reuters) - Cell phone makers are expected to report buoyant sales of lower-priced, feature-packed smartphones as consumers opt for "cheap chic" amid the global recession.

Research in Motion, the second-largest maker of smartphones after Nokia, surprised investors on April 2 with strong profits fueled by consumer-oriented, more affordable Blackberry models, and gave a rosy outlook.

Nokia is set to report a sharp fall in January-March profits when it releases quarterly results on April 16, with strong sales of its cheap touch-screen 5800 smartphone expected to be one of the few bright spots.

"The 5800 has clearly been a big success and may well prove to be Nokia's biggest profit driver in the first half of 2009," Nomura analyst Stuart Jeffrey said in a note.

The focus in the phone market this year has shifted increasingly to smartphones, as operators move subsidies to support consumers buying the feature-packed devices, which can generate more data revenue.

Sales of smartphones such as the Blackberry are expected to rise some 10-20 percent, compared with a fall of 10 percent or more in the overall market.

"The market share of smartphones is taking over from feature phones at an alarming pace," said Sean Dalton, general partner at Highland Capital Partners.

The world's No 4 handset maker, Sony Ericsson, is the most exposed to the demand for feature phones -- mid-ranged phones focused on key features like cameras or music players -- and the company shocked investors on March 20.