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Mobile Device Segment Continues to Grow

The worldwide mobile phone market grew at a healthy pace during the third quarter of 2007 with vendors shipping a total of 289.1 million handset units, according to IDC's Worldwide Quarterly Mobile Phone Tracker.

Worldwide shipments were up 9 percent from the previous quarter and 13.8 percent from the same quarter a year ago. Growth was driven by a combination of high-volume shipments of affordable handsets into emerging markets and high-end, feature-packed devices into mature markets.

The leading vendors improved both revenues and profits, in some cases building on double-digit operating profit margins as they balance their product portfolios.

"On a worldwide scale, the mobile phone market continued to post positive results in the third quarter, even as vendors struggle to balance revenue and profitability," said Ramon Llamas, research analyst with IDC's Mobile Devices Technology and Trends team.

On the one hand, emerging markets have required vendors to provide low-cost handsets, which boost volume but reduce revenue and sometimes profit per device. On the other hand, mature markets have an appetite for higher-end handsets that can generate more revenues and profit.

The leading vendors have been successful at balancing features and price for the distinct markets in a highly competitive space.

While growth in the overall mobile device industry has slowed over the past few quarters, the converged mobile device segment continues to grow several times faster than traditional phones, and accelerated to more than 50 percent year-on-year growth in the third quarter.

A wide selection of devices, combined with declining initial price points have made this segment of the market an immense growth opportunity for manufacturers. At the same time, this space is attractive for the operators because these devices are often bundled with a data plan, which in turn means increased revenue per user.

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