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The Future of Mobile Handsets
Telecom Trends International (TTI), May 2006, Pages: 101
Mobile Handsets Generated $117 Billion in Revenue in 2005
Top Three Vendors Increased Share to Over 60 percent of Total Revenue
This report considers the changing nature of a mobile handset and examines the wide range of applications impacting its development, including mobile music, mobile games, mobile TV, mobile camera, mobile camcorder, and mobile organizer. The report provides vendor market share and forecasts for the mobile handset market both in terms of revenue and subscribers for all the regions.
The mobile handset is evolving in two directions. On the one hand, it represents a convergence of feature-sets in a multifunctional device. On the other hand, it represents a divergence of feature-sets in devices focused on specialized applications.
This evolution has turned a mobile handset into much more than a medium for voice communication, enhancing the utility of the device and accelerating its growth. This evolution also means that handset manufacturers need competencies in areas that were traditionally not their domain.
The roll-out of next-generation networks is opening up new frontiers in innovation in mobile handsets. The high speeds made possible by these networks are enabling a slew of new and novel applications. Increasingly, with the proliferation of applications, voice is becoming a secondary factor when purchasing a mobile device.
As high-end markets reach near saturation levels in terms of new subscribers, low-priced handsets are emerging to cater to low-income groups, bringing the mobile phone within reach of all classes of society. Mobile handsets are beginning to penetrate pre-teen and senior citizen market segments, a factor that will make these devices virtually ubiquitous during the forecast period of this report.
The mobile handset market has been witnessing phenomenal growth and mobile devices have been undergoing unparalleled advances. Nevertheless, many mobile vendors are finding it difficult to survive in this market as evidenced by the recent exit of Siemens and Alcatel from this business. The reason primarily lies in the falling prices of mobile devices at the low end and intensifying competition at the high end.
However, prices of mobile handsets will keep shrinking and devices at the lower end will incorporate features found in high-end devices. Both of these factors will propel the growth of mobile handset shipments which will more than double over the next 7 years.
We project that the number of mobile handsets shipped will increase from 815.2 million units in 2005 to 1,694.4 million units in 2012. The shipments of UMTS handsets, which will grow the fastest, will reach almost 1 billion in this timeframe.
The regions of Middle East & Africa, China, Asia-Pacific, and Latin America will witness double-digit growth in handset shipments over the next 7 years. On the other hand, regions that already have a high penetration of handsets, such as Europe, North America, and Japan, will see a slowdown in growth.
Despite increase in shipments of the other three major vendors, Samsung, LG Electronics, and Sony Ericsson, their market shares have suffered modest declines. BenQ-Siemens had a dismal year as it slipped from fourth to sixth position.
Mobile handsets generated $117.2 billion in revenue in 2005, an increase of 14.9 percent over the sales in 2004. Mobile handset revenue will peak at $129.9 billion in 2008, and will then begin to decline, reaching $125.0 billion in 2012.
In 2005, Nokia, Motorola, and Samsung garnered a share of over 60 percent of handset revenue. Sony Ericsson was in fourth place in terms of revenue.
Sony Ericsson 4th in revenue, LG 4th in shipments
Nokia, Motorola, and Samsung were the top three vendors both in terms of revenue and shipments, the report said. These three vendors increased their share of revenue to over 60 percent in 2005. Sony Ericsson was in fourth place in terms of revenue and LG was in fourth place in terms of shipments.
The research report predicted that mobile handset revenue will peak at $129.9 billion in 2008, and will then begin to decline, reaching $125.0 billion in 2012. It said 815.2 million handsets were shipped in 2005, but the shipments will more than double by 2012 to reach 1.7 billion handsets.
According to the report, replacements will constitute 67 percent of handsets shipped by 2012. Due to falling prices of devices, revenue growth will significantly be behind shipments growth during the forecast period, it said.
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