Global Mobile Phone Sales on Pace to Grow 11% in 2008

(Business News & Technology News, 6 Aug 2008)

Worldwide sales of mobile phones will reach 1.28 billion units in 2008, up 11 percent from 1.15 billion units last year, according to Gartner Inc. In the first quarter of 2008, global mobile phone sales reached 294.3 million, and Gartner expects sales in the second quarter to be between 300 million and 305 million units.

"For the second half of the year, we expect sales in the third quarter to be more than the second quarter results, but only moderately as both Motorola and LG issued warnings for a sequential drop in sales, as well as an economic environment that remains challenging," says Carolina Milanesi, research director for mobile devices at Gartner. "All the hopes for mobile phone manufacturers for the overall year-end growth results rest on the final quarter of the year when most new products will be introduced to the market and the normal seasonality will help boost sales."

While the market is poised for double-digit growth in 2008 and 2009 (with sales increasing 10.3 percent), the industry faces challenges with some regions projected to experience a decline in sales this year. Mobile phone sales growth will increasingly rely on emerging markets as mature regions, such as Western Europe, Japan and North America reach saturation.

In the Asia-Pacific region, mobile phone sales are forecast to reach 472.5 million units in 2008, up 17.9 percent year-on-year. Mobile phone sales in Western Europe are projected to reach 188 million units, down 1.5 percent from last year, while in North America, mobile phone sales are expected to total 185.7 million in 2008, a 5.3 percent increase from 2007. Mobile phone sales in Japan are estimated to reach 47.7 million units, down 9.1 percent from last year.

"With a more mature market, mobile operators are seeing their service revenue come under pressure and, driven by lower flat-rate tariffs, demand for data services is starting to pick up, increasing demand for network investment," Milanesi says. "Cost control and putting pressure on supplier pricing are the business norm of operators. Hence, mobile device vendors are experiencing increased pressure on device pricing."


Five Key Trends in Mobile Devices Through 2009
Gartner has identified five major trends that will impact the mobile device market through 2009, in areas ranging from partner "ecosystems" and competitive landscapes to innovations in device usability and interfaces. The trends include:

Established Vendors Consolidate and New Players Join the Fray.
New device vendors, such as Apple and Garmin, are looking to differentiate themselves, while big-name vendors, such as Motorola, face pressure as market shares decline and design innovation becomes increasingly challenging. The lower cost of mobile phone reference designs and modules, as well as the appeal of such a large market, will attract more conventional consumer electronics companies to join the market.

Device Vendors Build Out Ecosystems.
Pressure from operators to lower the price of devices will drive some established players to seek out new sources of revenue from content and services sold to end users. This trend is epitomised by Nokia with Ovi, Sony Ericsson with PlayNow and Apple with its iTunes store. This new market will bring changes in relationships between vendors, operators and content providers. Applications relevant to enterprises, such as location and navigation, will increasingly become available directly from device vendors that are integrating GPS into their products.

Devices Makers Will Focus on Removing Complexity for the User.
Increasing device functionality and a need for differentiation will drive demand to simplify the user interface (UI) and service experience. As a consequence, mobile device vendors need to build up their UI competencies while retaining familiarity as well as considering how users can move horizontally across their devices' applications, rather than simply vertically within them.

Mobile Devices Increasingly Become Lifestyle Statements.
Style will play more of a role across the range of devices, driven not only by fashion trends but also by consumers' desires to reinforce their lifestyle choices. Vendors need to have established platforms on which small changes to casings and colours can be made without impacting costs. They will also need to consider partnering with nonmobile companies and brands—such as consumer electronics, fashion or sports companies—to increase the lifestyle appeal and consumer reach of their products.

High-End Device Platforms Become "Field-Refreshable." As cellular technologies become part of increasingly expensive consumer devices, vendors must manage ongoing support, upgrades and enhancement of drives. Because many users will hold onto high-end devices longer, these platforms will need more life cycle management in the form of upgrades and enhancements. Some vendors are implementing these "field refreshes" that can be made to support new digital rights management (DRM) requirements, download bug fixes, or download new applications, wallpapers or skins to keep devices up-to-date.

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