Mobile industry in need of new growth catalyst

15 Dec 2004

Having exploited camera phones and creating a fully subscribed market the mobile industry will experience a slowdown in market growth in 2005 due to the lack of additional growth catalysts, warns industry analyst IDC. Delays in creating compelling 3G applications to drive adoption will also hinder growth in 2005.

In 2004 the worldwide mobile phone market is estimated to have grown 20pc to 648 million units. Demand for colour displays and camera phones from both mature markets and developing markets remained strong through the first three quarters of the year and is expected to continue through the fourth quarter. Locally, at least two operators have indicated a strong rush to buy phones during the final quarter in the rush towards Christmas.

However, IDC warns that even with the advent of 3G, it may not be a significant catalyst to create a rush by existing and potential phone users to buy new phones due to delays in the evolution of compelling 3G services.

IDC believes that 3G adoption among the broad consumer subscriber base in Asia-Pacific, Europe and the US will take another few years before it begins to gather momentum. In 2006, 3G mobile phone shipments should expand to represent 18pc of the market and finally, in 2007, represent approximately 25pc of market shipments.

When carriers began offering 2.5G mobile phones in recent years with colour displays and cameras, existing wireless subscribers rushed to upgrade their basic, existing handsets and significant numbers of consumers decided to buy a mobile phone for the first time.

After a number of years of new purchases, replacements and upgrades driven by colour and cameras, a new catalyst must emerge if the market is to continue to expand at its current rate.

“Without a doubt, many pieces of the 3G puzzle are falling into place, from infrastructure deployment to semiconductor development to mobile phone availability. In particular, 3G mobile phones continue to improve, offering smaller form factors, longer talk time and lower price points than ever before,” said Alex Slawsby, senior mobile devices analyst at IDC.

“Continued delays in the evolution of compelling 3G services and content, however, remain. Although 3G mobile phone volume will grow, a relatively prolonged transition period from 2.5G to 3G will leave the mobile phone market with a weaker set of demand catalysts in 2005.”

By John Kennedy