Worldwide handset market shows signs of life, rebounding from its worst year ever - Market Intelligence - wireless communications industry - Brief Article

Mobile Internet, The, Jan, 2003

Despite being tied to a telecom industry that FCC Chairman Michael Powell recently described as "in utter crisis," the worldwide handset market will rebound from its worst year ever and increase shipments 1.8% in 2002. According to new research from IDC, there is good reason for optimism as shipments are projected to increase from 391 million in 2002 to 606 million in 2006, a compound annual growth rate of 9.5%.

"A wireless revolution is waiting in the wings," said Kevin Burden, program manager for Smart Handheld Devices at DC. "When mass wireless adoption occurs, it will result in a paradigm shift comparable to that created by the World Wide Web. However, until that happens, handset vendors must continue to research and develop enhanced features and functionality that will chive higher ARPU."

Modest growth in the handset market will come from first-time buyers and new subscribers in emerging markets, but it will be replacement sales in mature markets that will prove critical to overall market growth. A true market explosion, however, is contingent on the timely deployment of next-generation networks and the availability of compelling content and applications.

Key Findings:

- The worldwide handset market experienced it worst-ever performance in 2001, declining 4% from the previous year.

- The top-five handset vendors held 71.9% of total market share in 2001.

- A significant escalation towards outsourcing handset production will continue to mount.

- IDC forecasts the demise of analog handsets by 2003.

- Shipments of 2.5G handsets will surpass 2G handsets by 2005.

- Worldwide converged device (PDA/handset) shipments will reach nearly 63 million in 2006. For more information, visit www.idc.com.