Smartphone adoption growing fast; WiFi phone sales expected to top $145 billion in 2010

Market Wire, July, 2007

Sales of mobile phones, including smartphones, dropped 13% to $35.5 billion in the first quarter of 2007 following a seasonally strong pre-Christmas quarter in 4Q06, according to Infonetics Research in its latest "Mobile and WiFi Phones and Subscribers" report.

In the long term, mobile phone unit shipments are forecast to increase due to growth in developing countries, while revenue is forecast to decrease as the cost of basic units sold in developing markets continues to fall and competition in developed and saturated markets continues to increase, the report says.

"To date, smartphone purchasers have been largely business power-users, but the launch of Apple's iPhone and Samsung's BlackJack -- media-playing smartphones that appeal to consumers -- is giving the smartphone segment a boost, and could change the dynamics of the mobile phone market. Vendors will design more consumer-oriented smartphones, and cause fierce competition among incumbent players," said Richard Webb, directing analyst for wireless at Infonetics Research.

Other mobile phone highlights from the report:

--  Worldwide revenue for mobile phones is expected to total $117.5
    billion in 2010, an 18% drop from 2006
--  GSM phones made up 45% of worldwide mobile phone revenue in 2006,
    smartphones made up 18%, and the remainder was made up by CDMA, W-CDMA, and
    CDMA2000 phone sales
--  Worldwide revenue for the small but fast growing smartphone segment
    grew 10% in 1Q07 from 4Q06, driven by the wider availability of 3G, which
    unlocks the media application potential of smartphones beyond email
--  In 2006, 20% of total mobile phone revenue came from North America,
    34% from EMEA, 36% from Asia Pacific, and 10% from CALA
--  The number of mobile subscribers grew 26% to 2.5 billion in 2006
    

Meanwhile, worldwide WiFi phone revenue, though up significantly in 2006, fell 8% to $5 billion in 1Q07, but is projected to post strong double-digit growth every year through 2010, when it will top $145 billion, as WiFi is incorporated into a growing range of mobile phones.

Enterprises are ramping up adoption of WiFi phones, driven by increased use of wireless LANs and IP PBX technology, while consumers are adopting WiFi phones because of their increasing adoption of broadband connections with wireless and VoIP-enabled CPE. At the same time, operators are launching dual-mode FMC services, which will also drive adoption of WiFi phones.

Other WiFi phone highlights from the report:

--  Dual-mode WiFi/cellular phone sales are forecast to grow at a compound
    annual growth rate of 31% from 2006 to 2010, driven by healthy adoption in
    enterprise and consumer markets
--  Seamless handover FMC phones are expected to represent 35% of the dual-
    mode WiFi/cellular phone market by 2010, vs. 3% in 2006
--  Nokia leads in dual-mode WiFi/cellular phone revenue in 2006, ahead of
    Sony Ericsson and Motorola
--  SpectraLink (Polycom) leads in single-mode WiFi phone revenue market
    share, significantly ahead of Linksys and Cisco
    

Infonetics' report tracks GSM, W-CDMA, CDMA, and CDMA2000 mobile phones, smartphones and OS, single mode WiFi VoIP phones split by enterprise vs. consumer, and dual-mode WiFi/cellular handsets split by dual-service vs. seamless. The report includes 2006 market size totals, annual revenue and unit forecasts through 2010, market share detail, and analysis of the mobile and WiFi phone market for all regions.

For report highlights, log on to www.info.infonetics.com . For sales, contact Larry Howard, vice president, at larry@infonetics.com or 1 (408) 583-3335.

Infonetics Research ( www.infonetics.com ) is an international market research and consulting firm specializing in data networking and telecom. Services include quarterly market share and forecasting, end-user and service provider survey research, and service provider capex analysis.

Press Contact: Richard Webb Directing Analyst, Wireless Infonetics Research 1 (408) 583-3369 44 (0) 1689-851-618 Email Contact