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Mobile sales set to fall

Bell tolls for handset makers

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Sales of mobile handsets will decline to single digit growth, but not before annual sales break the billion barrier.

Analysts Informa reckon we'll see sales rise this year to 943 million units - up 16 per cent from 814.4 million last year. In 2007, they predict, total unit sales will reach 1.03 billion. Between 2002 and 2005 mobile handset sales grew by more than 20 per cent a year.

But then growth will slow.

Emerging markets will continue to grow strongly, but mostly for entry-level phones with low profit margins.

Informa analyst David McQueen also said mobile operators' moves into providing broadband, fixed line and TV services could distract them from properly addressing a shrinking market.

McQueen said operators were struggling to make revenue from the various features on high-end phones and that battery life is still a limiting factor.

Informa predicts handset manufacturers will increasingly try to find and exploit their own niches - such as Sony Ericsson's Walkman brand and Samsung's focus on high-end camera phones. But the analysts expect consolidation and mergers as manufacturers chase a more slowly expanding market.

The analysts also expect less low-end phones to be sold by 2011. Basic phones made up 28.3 per cent of total sales in 2005. This will fall to 10.3 per cent by 2011. By 2011, 55.3 per cent of handsets sold will be high-feature. ®

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