Mid-tier Mobile Phone Segment to Feel the Squeeze

(Business News & Technology News, 2 Jul 2008)

The most significant growth in wireless handset markets will occur at the top and bottom ends of the price and features range, as the smartphone and low-cost handset categories expand at the expense of the mid-range models commonly called "enhanced" phones. The enhanced phone sector is currently the largest in terms of shipments: 2007 saw 854 million units shipped. But it will be overtaken by both other classes in 2013, with just 441 million shipping.

"As we see more user sophistication and demand for high-end features, handset manufacturers will continue to push functions of high-level smartphone operating systems further down their product lines. Their smartphone portfolios will grow, and with them, the entire smartphone market," says Kevin Burden, ABI Research director.

Operators want more smartphone users too, because they generate higher ARPU. And operators like phones with standard operating systems that are optimized for their content delivery platforms.

Meanwhile, driven by the huge emerging markets in countries such as China, India, and Brazil, the low-cost and ultra-low-cost handset categories are set to become the largest classes of mobile phones by 2013 in terms of shipments, though not in terms of revenue. "While the unit shipments of ultra-low-cost handsets will be dramatic over the forecast period, the device class is only expected to account for 6 percent of the market's overall revenue," notes Burden. "But vendors will continue to pursue these markets for the sake of brand-building and the prospect of eventual upward migration by users."

Since no single mobile device will serve the needs of everyone, a number of other form factors will compete for users' mobile computing cycles. In particular, MIDs (Mobile Internet Devices) and UMPCs (Ultra-mobile PCs) show promise for wider consumer acceptance. Prices will be moderate (eventually under $200 for many MIDs) and they'll deliver a superior mobile Internet experience.

Click here for more information on the report "Mobile Devices Annual Market Overview" by ABI Research