Can Phone Vendors Maintain Growth?

Written by Adam Gosling

Thursday, 24 August 2006

Page 1 of 3 Probably! If you look at the latest IDC figures for Western Europe, it's apparent that renewal cycles, in part driven by the introduction of 3G services, continue to provide health growth despite saturation rates over 100 per cent. What do you do when everybody already has a cell phone? Get them to upgrade to the latest and greatest of course. The latest market data from industry research firm, IDC, shows that the Western European mobile phone market for combined traditional mobile and converged devices still managed 7 per cent growth in the second quarter. That took shipments up to 41.4 million units compared to 38.5 in the corresponding quarter of 2005. IDC explains that despite the generally held belief that steady growth in the traditional mobile phone market might be unsustainable as subscriber rates move beyond 100%, the second quarter pretty much turned that thinking on its head. "Further movement of WCDMA handsets into accessible price points including prepay bundles represented 21% of total shipments, and this, combined with the widespread introduction of highly compelling feature phones sporting comprehensive feature sets in innovative form factors, drove healthy renewal cycles in 2Q06, while the emergence of highly competitive prepay bundles invigorated demand at the low end," said Jean-Philippe Bouchard, senior research analyst, European Mobile Devices. IDC emphasises that while converged devices have consistently outperformed traditional mobile phones in recent quarters in terms of growth, 2Q06 saw converged device growth only marginally exceed that of traditional mobile phones as portfolio transitioning and device delays inhibited growth. IDC believes this further points to the strength of the feature phone in Western Europe. "The advantages of an open, evolved operating system for manufacturers, operators, and developers with regard to cost, time to market, and rich customisation advantages are undeniable," said Andrew Brown, program manager, European Mobile Devices and Computing. "However, from the perspective of most consumers the advanced capability is still either deemed unnecessary or lies invisible behind considerations such as form factor and multimedia capability," he said. The result is that consumer-centric converged devices are competing directly with high-end feature phones, which in terms of the most visible technical specifications such as cameras, are generally deemed indistinct from smart phones by most consumers. "Nokia is undoubtedly making substantial progress with S60 in the consumer space. However, the lack of commercial success other licensees have had with the platform is indicative of the dilemma faced by many vendors," said Geoff Blaber, senior research analyst, European Mobile Devices. "With demand for feature phones still strong the prospect of high initial costs before the advantages of platfomisation can be realised is an inhibitor to widespread migration to an evolved OS for consumer devices. Technology demands will command the move in the longer term but the migration is proving slower than vendors, operators, and commentators anticipated." << Start < Prev 1 2 3 Next > End >>