Low-cost handsets and smartphones will together account for almost 79% of all new mobile phones by 2014, according to analyst Juniper Research.
Juniper Research predicted that demand for mobile phones will be driven by the influx of new users from low-income socio-economic groups in developing markets and a rising demand for complex "smart" devices from affluent users in developed markets.
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Mobile phone makers such as Nokia, Apple and RIM (makers of Blackberry) are well positioned to benefit from these trends, according to Juniper Research. However, mid-market phone manufacturers such as Sony Ericsson and Motorola will have to rethink their strategy.
The report's author Andrew Kitson said: "Low-cost handset shipments will number more than 700 million in 2014, up by 31% from levels seen in 2008, albeit down slightly from a peak of 716 million in 2012, as some users begin to upgrade to costlier devices.
"At the same time, smartphone shipment volumes will grow continuously across the forecast period, reaching almost 360 million by the end of the period. We therefore expect that mid-range device sales volumes will fall by more than 41% over the period."
Smartphones are becoming increasingly used as essential business tools. Microsoft and Nokia have joined forces to port Microsoft Office to Nokia smart phones, a move that could see the Nokia devices become more integrated with corporate IT.