2002 Handset forecast down, but not out

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	2002 Handset forecast down, but not out	By Jørgen Sundgot, Thursday 30 May 2002

In-Stat/MDR's latest report says handset sales in 2002 won't meet initial projections, but that doesn't mean handset manufacturers are going to the poorhouse anytime soon.

Despite having experienced a myriad of difficulties over the past year, the global handset industry will grow from $60 billion USD this year, to more than $100 billion USD in 2006, according to In-Stat/MDR's latest report on the state of the market. In 2001, handset sales were plagued by overproduction, delays in the arrival of handsets with the desired feature sets, and a faltering worldwide economy.

However, according to Ray Jodoin, a principal analyst with the high-tech research firm, "We can still look forward with a moderate amount of enthusiasm. Now that prepaid subscribers are being de-emphasized in many regions, the percentage of low-featured, low-margin, handsets are on the decline and prices are expected to remain reasonably stable over the next 5 years."

For handset sales growth to rebound to previous levels, a number of conditions will be necessary, including reasonably priced and desirable content - ideally without a "cover charge", use of 3 1/2 x 5 CM (minimum) color displays, intuitive operation, multi-functional Global Positioning System (GPS) functionality, multi-band roaming capabilities and the ability to replace a cordless phone in both home and office environments.

"Content is key," said Jodoin. "While voice will continue to drive the worldwide market for the foreseeable future, data can help drive handset sales, not to mention margins, as well as carriers' Average Revenue per Users (ARPUs), upward. This is contingent, however, on whether the content and price are right, which they currently are not."

In-Stat/MDR also found that in 2002, the Americas will account for the activation of 25.8% of the worldwide handset uptake, while Latin America will take an increasingly important roll in handset activations as their share of the worldwide market climbs to 10.2% in 2006.