Worldwide Cellular Sales Showing Slow Growth

Worldwide cellular handset sales will grow by a modest 8 percent in 2001, reaching 440 million units, according to research by Strategy Analytics. The reason for the slowdown lies in low replacement activity, which will rebound after 2001 resulting in 20 percent annual growth in subsequent years. Worldwide handset sales will surpass 1 billion in 2006.

“Western Europe is largely responsible for the slow market in 2001,” said Phil Kendall, director of the Strategy Analytics Global Wireless Practice. “Handset sales in the region will fall by 13 percent as the replacement market fails spectacularly to make up the shortfall left by low subscriber growth in a saturated market. To a lesser degree, a similar trend has been seen in North America, though both regions will recover in 2002. Combined with strong growth in emerging regions, worldwide handset sales will post healthy growth for the next five years.”

Saturated markets for phones are one of the reasons carriers will be looking to 3G networks [definition] and their offerings to as a source of revenue.

Mobile commerce will become a substantial source of revenue for wireless carriers as 3G networks are built out, according to research by Cahners In-Stat Group. In-Stat’s report “3G-Based Mobile Commerce: Europe Will Lead the Way,” found that Europe, by virtue of size and its choice of a single, unified 3G wireless standard, will be the largest market for mobile commerce services, closely followed by Japan, whose per-capita consumption of m-commerce services will exceed even that of the Europeans.

“Certain words and phrases, like WAP, the wireless Web and 3G have lost popularity in recent months, victims of delays, poor implementation and low customer interest,” said Ken Hyers, senior analyst with In-Stat’s Mobile Commerce service. “However, carriers should not despair. The long-term outlook for this space is favorable, with total 2G and 3G-based combined mobile commerce projected to grow considerably through 2005.”

In-Stat does warn carriers that the cost of deploying advanced services must be weighed against the high costs of bidding for 3G licenses and for building out 3G networks.

As for the commerce, infotainment is expected to be the source of the bulk of revenues from m-commerce for both 3G carriers and merchants. As much as 70 to 95 percent of carriers’ total m-commerce revenue will be derived from these sources.

In-Stat also predicts that the rest of the world will be eager users of 3G mobile commerce services, dominated by China and other Asian markets, once 3G networks are rolled out. But the Americas will continue to be held back by fragmented network standards and will not have access to 3G services, and consequently, 3G mobile commerce, before 2005.

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