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Outlook for mobile devices 'more gloomy'

Posted: 08 Dec 2008     Print Version  Bookmark and Share

Keywords:mobile-device  wireless subscribers  life cycles 

The once almost unstoppable growth in mobile-device shipments and revenues is coming to a stop as wireless subscribers around the globe extend the life cycles of their existing devices in response to the current economic crisis.

In the third quarter of 2008, the mobile-device market contracted slightly, ending with 31.67 crore units, down 1.1 per cent from 320.4 in the second quarter, according to iSuppli Corp. Mobile handsets, which account for the vast majority of this segment, will achieve shipments of 31.1 crore units in the third quarter of 2008, down 0.3 per cent from 31.2 crore in the second quarter.

A check in the channel shows that manufacturers are being conservative in their sourcing and component procurement activities, and they are making efforts to reduce inventory to maintain lean and efficient operations.

(Click to view full image)

iSuppli has lowered its forecast of global mobile-device shipment growth to 8.9 per cent in 2008, down from 10.4 per cent, which will end the year at 128.7 crore units.

"The outlook for 2009 is even more gloomy than for 2008," observed Tina Teng, senior analyst, wireless communications, for iSuppli. "With the United States, Europe and Japan entering recessions, economic uncertainty and waves of layoffs mean that consumers are likely to spend less on mobile products."

Shipments in 2009 are expected to decline by 5.6 per cent to 121.5 crore units.

With more than 300 crore subscribers worldwide, the growth of the mobile-device market has been driven by upgrade purchases of existing customers, Teng noted.

"While new subscriber additions are continuing at a healthy pace and are poised to grow by 563.9 million (56.39 crore) in 2008 and by 506.5 million (50.65 crore) in 2009, an overwhelming majority of the new subscribers are coming from the rural areas of emerging regions," Teng said. "These subscribers primarily are purchasers of low-cost, entry-level handsets. However, the pricier feature-phone and smart-phone market segments are driven by existing subscribers who are upgrading their mobile devices to take advantage of new features and advanced data services. As the economic climate deteriorates, these customers are delaying their purchases."

With the penetration of mobile handsets in emerging markets rising rapidly during the past few years, upgrades have grown to account for more than 50 per cent of total mobile-device shipments in 2008. Because of this, mobile-device shipment growth has become more sensitive to the upgrade cycle.

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