Technology | Media | Telecommunications

Tuesday, November 20, 2007

Super 3G Mobile Handsets Drive Demand

The worldwide mobile market change towards higher data-rate networks and associated handset availability has meant that by 2012, devices known as Super 3G will become the largest selling handset type, according to Informa Telecoms & Media.

The latest edition of Informa's report entitled "Future Mobile Handsets" reveals that, while the rate of overall worldwide mobile handset growth will slow from 2008, super 3G devices will account for 35.8 of all handset sales in 2012, up from only 1.8 percent in 2007.

Overall, the global handset market has more than doubled in 6 short years, reaching 974.7 million handset volume sales in 2006. This buoyant growth is expected to slow from 2007 onwards, with annual growth rates eventually dipping under 10 percent from 2008.

Total handset sales are forecast to pass the 1 billion mark for the first time in 2007, to reach an unprecedented 1,105.5 million, according to Informa. Global volume sales are not about to go in decline, rather there will be a degree of levelling out in shipment numbers to reach a still remarkable 1.452 billion units by 2012, a CAGR of just 5.6 percent.

But the market has become polarized. On the one hand, the emerging economies are experiencing large increases in subscriber numbers, driven by healthier economies and the availability of low-cost, entry-level handsets. They present a good opportunity to keep headline sales figures healthy, but the issue then becomes one of available margins.

Yet in more developed regions with high penetration rates, growth is largely restricted to a more active replacement of handsets for those with leading designs and enhanced technical capabilities. To further aid growth in replacement markets, efficient handset segmentation will become increasingly important for promoting the adoption of advanced services that are being made possible by the network speeds offered by 3G networks and beyond.

“While handset manufacturers are basing their business models on low margins and high-volume supply for basic phones and low feature phones, they are currently banking on high margins for feature rich phones, smartphones, value-added service (VAS) phones and mobile broadband devices supporting super 3G and higher generations. Given that the cost of these devices is still relatively high, manufacturers are forced to base their profit on the value of the device rather than on volume,” commented Dave McQueen, Principal Analyst at Informa Telecoms & Media.

For the past five years, Asia Pacific has been the world's largest handset market, with sales estimated at 360.3 million in 2006 -- 30.8 percent of which were sold in China alone. Far from saturating, growth in the region is expected to increase dramatically over the next five years, with the total number of handsets sold each year increasing by 68 percent between 2006 and 2012. By 2012, 24.9 percent of all handsets sold will be super 3G, led by the markets of South Korea and Japan each with sales penetration of over 88 percent.

The next largest region in terms of total sales is Europe, which saw healthy growth from 2003-2005 following a fallow period. Sales for the region stood at 252.4 million in 2006, with 63 percent taken by West Europe although the East European market is steadily growing. Growth in Europe is expected to continue to 2012, reaching sales of 328 million in that year, but the annual growth rate is expected to slow from 2009 to less than 5 percent year-on-year.

By then, super 3G is expected to form 63.7 percent of total sales, a larger volume than Asia Pacific, with West Europe witnessing penetration of 85.7 percent.

North American handset sales reached 139.1 million in 2006, with growth anticipated to continue over the next three years. Sales by 2012 will reach 184.3 million, 62.8 percent taken by super 3G devices. The total market in Africa and the Middle East is also picking up pace, mainly through the large increases in subscriber numbers in what is a highly populated region with low penetration rates; it overtook the Latin American market in terms of volume sales for the first time in 2006. However, both regions are not expected to register over 14 percent of super 3G sales by 2012.