Apple may take major share of the increased smartphone demand

According to a recent survey, the mobile handset manufacturing industry continues to witness increased demand for smartphones. Around 37% of the sample population already owns a smartphone, while 14.4% plans to buy the product within next 3 months.

The major benefit from this increased demand for smartphones will be felt by industry leaders like Research In Motion (RIMM), Apple (AAPL) and Palm (PALM), holding 41%, 25% and 7% market shares respectively. But new Apple and Palm products are a-buzz among the potential customers of new-age smartphones. The data unveils good business prospect for the Apple and Palm in the smartphone segment.

Again, Apple supersedes Palm in smartphone demand, as 44% of the potential smartphone buyers from the sample will buy Apple phones, while the Palm Pre has witnessed a 8% increase in smart phone purchases. The release of the iPhone 3GS, along with price cuts to their basic model have led to a big spike in future demand for Apple. The company continues to take market share with its Macintosh and smartphones.

We expect Apple to trade at a large premium to its peers. But given weak consumer spending for other products and a slowing overall PC market during fiscal 2009, we maintain a Hold rating on Apple.

Palm, despite hopes of a rise in demand for smart phone, had earlier struggled to match supply with demand for the new handset. This apart, the Palm brand name no longer commands the same attention it did in its earlier days. Our confidence is low on the long-term prospects of the company, so we reiterate our Sell rating on Palm.

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Read the full analyst report on “PALM”
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