The global market for feature phones has continued to dwindle recently, since most branded handset vendors have shifted their focuses to the development of smartphones on the back of strong demand. The shift of focus has resulted in an easing in competition in the feature phone segment, and therefore enhancing the opportunity for vendors to make more profits from the production of feature phones.

Nokia, Samsung Electronics and China-based handset makers are being indicated as those who are still competing eagerly in the feature phone sector.

Market sources have indicated that global shipments of feature phones suffered a setback of 10% on year in the fourth quarter of 2011, while smartphone shipments advanced by 55% during the same period, pushing the ratio of smartphones in the global handset market to 35%.

The advancement of smartphones come as major branded vendors, including Samsung, Motorola Mobility, LG Electronics, Huawei Device and ZTE, have continued to pour resources into the development of smartphones. Moreover, some vendors such as Sony have even phased out from the feature phone market.

Given that market size for feature phones still reaches over one billion units a year, the production of feature phones could turn out to be a cash cow for vendors due to less capital commitment for R&D and marketing efforts as compared to the development of smartphones.

Profits generated by feature phones and smartphones at Nokia varied widely in the fourth quarter of 2011, in which sales of feature phones yield an operating margin of 13.5% versus a negative 7% generated by smartphone models.