2006 will be the last year of massive overall worldwide growth in mobile handset sales according to Informa Telecoms & Media  Informa says that global handset sales will rise from 814.4 million at the end of 2005 to 1.26 billion by 2011, but that handset growth will slow dramatically from 2007.
The prediction comes in the latest edition of Informas flagship report, Future Mobile Handsets (8th edition). The report reveals that saturation in developed markets will start to balance out the booming growth in emerging regions.
Handset manufacturers have enjoyed a fantastic time of it in recent years, but theyre really going to struggle to sell as many handsets and sustain the same levels of profitability says Informa Principal Analyst, Dave McQueen. The growth in developing markets such as India, China and Latin America is impressive, but we are not seeing the same levels of phone take-up per capita. With handset sales in saturated developed markets being much slower and reliant on replacement of old models, the net effect is a major slowdown in overall rate of growth from next year.
Since the slump in the worldwide handset market at the turn of the century, it has experienced double-digit growth year on year. Informas predictions, however, reveal this buoyant growth will slow from 2007 onwards, with annual growth rates eventually declining from 15.7% in 2006 to 3% in 2011.
The emerging economies are experiencing large increases in subscriber numbers, driven by healthier economies and the availability of low-cost, entry-level handsets. Yet in more developed regions, with high penetration rates, growth is largely restricted to active replacement of technologically advanced handsets, with capabilities including digital cameras, MP3 playback, video and broadcast TV. This, says Informa, will not sustain such major increases.
Informa is predicting a sustained period of mergers and acquisitions among handset makers as intense competition and a shortening handset lifespan force many vendors and operators to drastically change their business models or risk dropping out of the market. Informa says that many, especially in the over-serviced Chinese market, will be swallowed up by dominant leading brands such as Nokia and Motorola who are pulling away from the rest. Pressure will also come as a result of the very low profit margins gained by low-cost handsets sold in some developing territories.
In developed markets, functionality will become ever more important for handset manufacturers as they attempt to maintain sales in spite of high levels of penetration. The onset of multimedia messaging, in tandem with colour screens, has pushed the mass-market arrival of cameraphones in most markets worldwide, followed closely by gaming, video download and video streaming. The next key battlegrounds for vendors, says Informa, are music and Mobile TV.
It says that 9.6% (120.1 million) of all handsets sold will be equipped with broadcast Mobile TV capability in 2011. The strongholds of China and South Korea will dominate this sector over the coming years, but by 2011 the US, China and Europe will have also grown to be key.
Informa believes the number of handsets sold with music capabilities will rise from 69.8 million in 2005 to 126.1 million in 2006 – an 80% increase. 2011 is predicted to see 55% of all handsets sold enabled with music playback functionality.
Cameraphones, one of the most successful features of next generation handsets, will represent 81% of total handset market sales by 2011. Informa believes this is still a major growth area, especially as operators have thus far failed to capitalise on increasing revenues from cameraphones by focusing the technology on person-to-person messaging rather than activities normally associated with digital cameras, such as uploading pictures onto PCs and either printing them out or sharing them via the Internet. Improved software enabling users to upload images straight onto a personal mobile web blog (moblog) site will help drive the market.
While the technology has improved significantly to handle many of these added features, future mobile handsets will need to incorporate more powerful processors, greater memory components, enhanced displays and increased battery longevity to cope effectively says McQueen. The industry must face up to challenges ranging from consumer cynicism and pricing, to network interoperability, compatibility and roaming issues if many of the newer services are to reach critical mass.
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