Asia to save the device-makers

07 Aug 2008
00:00

Emerging markets, and Asia in particular, will save the handset business this year.

Handset sales are expected to fall in western Europe and Japan in 2008, according to a Gartner forecast.

It expects device shipments to grow 11% this year to 1.28 billion units.

The biggest chunk of these will be sold in Asia (ex-Japan) - 472.5 million, up 17.5%. European sales will slip 1.5% and 9.1% in Japan. North America will see a 5.3% increase.

Last year 1.15 billion phones were sold, up 16% from 990.9 million in 2006.

It's not just the financial crisis in western economies, although that's playing its part. Both Motorola and LG expect sales to fall sequentially in Q3, Gartner notes.

"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," says Carolina Milanesi, Gartner research director for mobile devices.

But it's part of a longer-term trend.

"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.

In other words, European and North American operators are cutting handset subsidies to help pay for flat-rate data plans and high-speed networks.

For the medium-term, the best prospects for the mobile phone manufacturers will be in the developing economies.

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