Upgrades Expected to Up Handset Sales

The wireless handset industry could allow some optimism to seep in as data from ARC Group indicates that a modest recovery is imminent. After a drop from almost 400 million to 385 million units in 2001, ARC Group forecasts handset industry sales to reach 430 million in 2002, with steadily improving market conditions propelling sales to 880 million units in 2007.

ARC Group consultant, Steven Hartley says, “After 18 months of hard times, there does at last appear to be light at the end of the tunnel for beleaguered handset vendors. The range of handsets to be released in 2002 is extremely impressive, with an excellent array of new features. Users will certainly want to upgrade their existing handset. Also, manufacturers are now leaner, more efficient and more aware than ever of costs and return on investment. This all makes for a very encouraging outlook for the industry.”

ARC Group analysts cite feature-packed handsets that support 2.5G and 3G network launches around the world, and Bluetooth and Java innovations for the surge in sales. Given the importance of the replacement handset market in developed markets such as Europe and Japan, these factors will compel users to upgrade their handsets.

Datamonitor offers a breakdown of the expected revenue with predictions of 2G phone sales reaching 146 million and 3G phone sales climbing to 11 million by 2005 – the increase will be propelled by the need to replace outdated analog phones.

As wireless technology develops, mobile users will be encouraged to upgrade their devices to take advantage of the enhanced data service offerings. “Smart phones will grab nearly 90 percent of mobile phone sales within five years,” said Ira Brodsky, president of Datacomm Research. “Handheld devices will leverage wireless Internet access to help people communicate with each other, buy and sell goods and services, and navigate their local environments. Combined shipments will exceed 350 million units by 2003.”

The development community continues to work on wireless innovations and improved technology. In mid-2001, Evans Data Corporation conducted a global survey of 550 wireless application developers that asked about their focus over the next 18 months. The findings indicated that nearly half (almost 45 percent) of the developers already working on wireless applications expected to spend between 25 percent and 100 percent of their time on wireless development – the results of these efforts could be seen in the coming year.

“Even though the public has adopted wireless data devices more slowly than expected, the wireless Internet continues to grow,” said Jay Dixit, Evans Data wireless analyst. “Even though sales have slowed down, wireless developers have not. The results of the most recent wireless developers survey show that application development in this field continues to accelerate. As new technologies are adopted and tools for wireless development become better, developers invest more and more time working on wireless applications.”

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