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Multimedia-Centric European Mobile Devices

According to IDC, the Western European mobile phone market, consisting of traditional mobile phones and converged devices, grew by 9 percent year on year in 3Q06, with shipments reaching 44.1 million units compared to 40.5 million units in the corresponding period of 2005.

"The third quarter of 2006 saw the Western European mobile phone market continue to exhibit healthy growth year on year as further intensification of competition in the high-end feature-phone segment, driven by the proliferation of media and specifically imaging-oriented handsets in highly innovative form factors, maintained healthy renewal cycles in combination with strong prepay traction at the low end," said Jean Philippe Bouchard, senior research analyst, European Mobile Devices.

However, IDC also emphasizes that in contrast to the previous quarter, the converged device segment showed far healthier growth of 30 percent year on year as key vendors such as Sony Ericsson completed portfolio transitioning and launched new products to the market ahead of the high-volume final quarter.

"While converged devices demonstrated lower growth than anticipated in the first half of 2006 in Western Europe, due to vendor portfolio transitioning, key product delays, and strong competition from competitively positioned feature phones, third-quarter performance partly confirmed expectations of a strong 2H06 both in business and consumer segments as converged devices grew to represent 8 percent of the total mobile phone market," said Andrew Brown, program manager, European Mobile Devices.

Consequently, IDC anticipates healthy final-quarter growth for both converged devices and traditional mobile phone segments, resulting in expected full year 2006 growth of 11 percent year on year.

"IDC expects competition in the high end of the Western European mobile phone market to continue to intensify during the final quarter and into 2007 due to the volume of products attempting to embrace convergence and execute on the challenge of communicating the proposition to the end user," said Geoff Blaber, senior research analyst, European Mobile Devices.

"However, while competition and a proliferation of multimedia-centric products will drive healthy renewal cycles and total market growth, IDC predicts that vendors will increasingly resort to highly aggressive pricing strategies to appeal to operators by reducing the requirement for subsidization, therefore impacting overall profit margins."

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