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Consumer Media Evolving onto Smartphones

Global sales of mobile phones, including smartphones, dropped 13 percent to $35.5 billion in the first quarter of 2007 following a seasonally strong pre-Christmas quarter in 4Q06, according to the Infonetics Research latest study entitled "Mobile and WiFi Phones and Subscribers."

In the long term, mobile phone unit shipments are forecast to increase due to growth in developing countries, while revenue is forecast to decrease as the cost of basic units sold in those markets continues to fall and competition in developed and saturated markets continues to increase, the report says.

"To date, smartphone purchasers have been largely business power-users, but the launch of Apple's iPhone and Samsung's BlackJack media-playing smartphones -- that appeal to consumers -- is giving the segment a boost, and could change the dynamics of the mobile phone market. Vendors will design more consumer-oriented smartphones, and cause fierce competition among incumbent players," said Richard Webb, directing analyst for wireless at Infonetics Research.

All the more reason why I believe that mobile phone service providers with under-performing value-added service offerings need to quickly figure out how they will inject some life back into their market momentum. The overall digital media market challenge/opportunity varies by market -- the growing trend of side-loading content in the U.S. is a major issue that will effect service revenue upside potential.

Other mobile phone market highlights include:

- Worldwide revenue for mobile phones is expected to total $117.5 billion in 2010, an 18 percent drop from 2006.

- GSM phones made up 45 percent of worldwide mobile phone revenue in 2006, smartphones made up 18 percent, and the remainder was made up by CDMA, W-CDMA, and CDMA2000 phone sales.

- Worldwide revenue for the small but fast growing smartphone segment grew 10 percent in 1Q07 from 4Q06, driven by the wider availability of 3G, which unlocks the media application potential of smartphones beyond email.

- In 2006, 20 percent of total mobile phone revenue came from North America, 34 percent from EMEA, 36 percent from Asia Pacific, and 10 percent from CALA.

- The number of mobile subscribers grew 26 percent to 2.5 billion in 2006.

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