In recent quarters, shipments of smartphones and camera phones have been heating up, according to In-Stat/MDR.

The high-tech market research firm reports that, in Q1 of this year, 1.7 million smartphones shipped around the world, and the pace appears to be quickening. Similarly, camera phones have been moving at a rapid pace. For all of 2002, camera phones shipments totaled about 18.2 million units, and Q1 2003 shipments were 7.8 million.

However, according to Neil Strother, a senior analyst with In-Stat/MDR, "While these two handset categories have bright futures, a look beyond the attractive opportunities reveals some noteworthy threats and hurdles."

For smartphones high prices, technical glitches, bulky devices, a lack of compelling enterprise and consumer applications, and inadequate network capacity, are all presenting a barrier to acceptance. "In addition, the perception that the devices are mainly for mobile professionals still lingers," said Strother. Camera phones, on the other hand, are hindered by the need for better image sensors, more on-board memory for picture storage, longer battery life, and network improvements to make picture sharing easier and interoperability a reality. Privacy concerns are also plaguing the market.

In-Stat/MDR has also found in its report that both of these handset sub-segments are in for solid growth over the next five years. Smartphones will be commonplace by 2007 (growing 94.5% on a compound annual basis ), and camera phones should be ubiquitous. These handset categories are already starting to merge, and, by 2008, it's likely there will be little to distinguish them. New handsets at that time will be "smart" in a variety of ways, and a built-in camera will be standard.