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Wireless industry to face slowdown

Posted: 15 Feb 2007 ?? ?Print Version ?Bookmark and Share

Keywords:iSuppli? wireless? cellphone? mobile handset? W. David Gardner?

The vendors and participants at the 3GSM World Congress in Barcelona, Spain, this week may be unveiling a wide range of new mobile phone-based products and services, but their biggest challenge isn't the competitionit's the fact that wireless growth is poised to slow dramatically.

Market research firm iSuppli said that even the latest smartphones aimed at developed markets and ultra-inexpensive phones aimed at the Third World and developing nations won't halt the decline in subscriber growth and the growth of phone sales.

"The slowdown in new subscriber growth and the deceleration in mobile-phone sales translates directly into deteriorating market conditions for wireless carriers," said Dr. Jagdish Rebello, iSuppli's director and principal analyst, in a statement.

iSuppli predicted that global mobile phone subscriber growth will decelerate to 12.8 percent in 2007, from average growth rates of 25 percent in 2004, 2005 and 2006. The decline is expected to continue in subsequent years, dropping to 9.6 percent in 2008, 7 percent in 2009, and 5.7 percent in 2010.

As expected, the manufacture and sales of mobile phones is likely to track subscriber growth, according to a iSuppli report. The firm forecast a mobile phone production growth rate of 9.1 percent, down from the average growth rate of 19.3 percent for the preceding three years. Production rates are expected to continue to decline to 6.9 percent in 2008, 4.8 percent in 2009, and 3 percent in 2010.

"Carriers and their mobile phone suppliers need new strategies to counter the impact of this phenomenon," said Rebello.

To stimulate growth, iSuppli suggests that wireless carriers provide a new range of advanced services like Web access and music and TV playback for users in advanced industrialized nations. The market research firm suggests that ultralow-cost handsets can stimulate growth in Latin America, China, Africa, the Middle East, Australia and India.

"For India and other developing regions, the next phase of growth will be driven by low-end phones," said Rebello, who noted that India in particular could enjoy rapid handset growth. Cellphone penetration in India is just 13.5 percent in 2007, iSuppli said, while the predicted penetration will rise to 31.5 percent in India in 2010.

- W. David Gardner

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