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World mobile phone market growth to stall

Revenues will not reach 2005's peak until 2009, researcher warns

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Mobile phone shipments may rise this year, but manufacturers are going to see revenues fall as the momentum driving the market over the past few years stalls.

That's market watcher iSuppli's forecast, at any rate. This week it predicted that global factory revenue will fall 4.7 per cent from $115.1bn in 2005 to $109.7bn this year. While growth will resume in 2007, the firm reckons, it will be slow, and sales will not match 2005's total until 2009.

Production will plateau at around 900m units a year for the rest of the decade in market contrast to the rapid output growth seen from 2002-2004, the researcher said, when output grew from around 450m units to roughly 750m. Last year saw an improvement over 2004's figures - it produced record revenues and shipments - but the numbers revealed the start of a slowdown.

It's the classic set of circumstance: the world's mobile-phone markets are saturated, and sales are coming almost exclusively from replacement activity rather than new users. At the same time, prices are falling at a rate iSuppli describes as "precipitous".

iSuppli reckons the global average selling price (ASP) will fall 9.2 per cent this year from $142 last year to $129. Vendors are trying to boost demand in emerging markets with very cheap handsets. Elsewhere, the need to drive 3G adoption is forcing them to offer high-end phones at lower price points than they might once have commanded.

The good news is that by 2007 the ASP will have fallen to just $128, a fall of a single percentage point, and iSuppli is forecasting sub-one per cent drops in following years, largely driven by cheaper components. ®

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