iSuppli: Major slowdown ahead for global mobile market
By Colleen Taylor -- EDN, February 12, 2007
The mobile phone business is set for a slump, according to analysts at iSuppli Corp.
After rising by an average of 25 percent in 2004, 2005 and 2006, global mobile phone subscriber growth will decelerate to 12.8 percent in 2007, according to the El Segundo, CA-based market research firm.
The bad news does not end there: the slowdown will continue during the following years, iSuppli said, with subscriber growth dropping to 9.6 percent in 2008, to 7 percent in 2009 and to 5.7 percent in 2010.
Figure 1 below is iSuppli’s estimate and forecast of mobile-phone service subscriber growth rates.
According to the firm, in parallel with the slowdown in subscriber gains is a major drop-off in production growth for mobile phones. In 2004, 2005 and 2006, mobile-phone unit production grew by an average of 19.3 percent. In 2007, the growth will slow to 9.1 percent, followed by 6.9 percent in 2008, 4.8 percent in 2009 and 3 percent in 2010, iSuppli said.
“The slowdown in new subscriber growth and the deceleration in mobile-phone sales translates directly into deteriorating market conditions for wireless carriers,” Jagdish Rebello, director and principal analyst for iSuppli, said in a statement. “Carriers and their mobile phone suppliers need new strategies to counter the impact of this phenomenon.”
Along with the bad news, however, the firm did provide phone suppliers with some tips to deal with the upcoming slump. With fewer new subscribers to be found worldwide, carriers "need to focus on squeezing more revenue out of their existing customers in developed regions" by offering enhanced services-- like Internet access, mobile TV, and music playback capability-- that subscribers are willing to pay for. However, the firm pointed out that even new mobile content services are in a constant state of flux, with "ringtones already having peaked, ringback tones gaining momentum, and mobile TV services just debuting worldwide."
The firm also emphasized the need for suppliers to focus on catering to the mobile needs of less developed areas of the world.
According to iSuppli, developing nations and regions have much lower wireless penetration rates, with Latin America at 48.3 percent; China at 24.4 percent; Africa, the Middle East and Australia at 23.6 percent and India at a mere 13.5 percent.
However, this situation is changing rapidly, the firm said, with penetration in 2010 rising to 65.5 percent in Latin America; to 36.6 percent in China ; to 34.8 percent in Africa, Middle East and Australia and to 31.5 percent in India .
For wireless carriers to achieve any significant increase in subscribers during the next three years, they must offer phones that cost $40 or less, iSuppli said. For its part, Texas Instruments Inc. has announced a OMAP-Vox single-chip solution named eCosto that the company said will foster development of lower-cost multimedia-rich feature phones.
“For India and other developing regions, the next phase of growth will be driven by low-end phones. To serve this area, manufacturers need to drive down their phone costs," Rebello added.
