2006 Shipments, 2007 Forcasts

The latest forecast for mobile phone shipments in Europe and the Middle East from IDC anticipates a total of more than 400m units for 2007. This figure, which includes both traditional mobiles and what IDC calls “converged devices”, represents year-on-year growth of 12% and constitutes over a third of global mobile phone shipments.
Looking forward to 2007, IDC anticipates a slight slowdown in growth, indicative of lengthening postpay contract terms in tandem with further saturation of subscriber growth. From a technology and product perspective, however, the market will see further steps along the path of convergence, which will be a key driver of volumes in high-end segments.

“2007 promises to be an exciting year with the widespread integration of technologies such as HSDPA, WiFi, mobile TV, GPS, and high-capacity storage in conjunction with further acceleration in the extension of Web services to the mobile domain, all of which will present operators with the opportunity and challenge of driving new service and data revenues,” observed senior analyst Geoff Blaber.

“Apple’s entry into the mobile phone market will further invigorate the industry in 2007 by redefining user expectations in the context of user experience and as a consequence command vendors to reconsider the conservative approaches to UI design adopted to date.”

However, IDC warns that despite clear growth opportunities, overall market conditions in Western Europe will become increasingly challenging in 2007. “ASP declines in 2007 will be an inevitable consequence of operator scrutiny of portfolio costs and a desire to reduce platform fragmentation and the unnecessary reciprocation of devices with consistent form factor and specification sets across the portfolio,” said Andrew Brown, program manager for European Mobile Devices and Computing at IDC. He is predicting further industry consolidation as vendors outside the top 4 or 5 struggle to compete in a climate that is becoming increasingly sensitive to cost.”

Strategy Analytics,
which records handset sales in a slightly different way, suggests total mobile phone shipments reached 1bn units globally during 2006 . Q4 saw a record 300m phones shipped, up 22% from a year earlier. In this quarter, Nokia passed 100m units for the first time; Motorola gained market share, Samsung and LG were marginally down, and Sony Ericsson was the star performer. In terms of revenues, it has overtaken Samsung to become the world’s third largest vendor. Strategy Analytics forecasts 1.1bn for 2007, a 12% year-on-year increase.

ABI Research counts slightly fewer shipments – almost 294m in Q4, with the annual total for 2006 at 990m. ABI thinks Q4 could have done better, but “the handsets lined up in end-of-year festive promotions proved rather underwhelming … Reviewing handset shipments for 2006, you would have to give a B+ for Effort but only C+ for Results”.

Given the 4Q performance, ABI’s expectations for 2007 are cautious – “growth is likely to be in the 10% to 12% range” say the researchers.

By contrast, Merrill Lynch has raised its forecast for 2007 global handset shipments from 10% to 13%. That puts the year-end total at 1.1bn; Merrill Lynch thinks sales to new subscribers in emerging markets will drive the industry, though net additions are expected to peak in 2007 for the key eight emerging countries – India, China, Pakistan, Bangladesh, Indonesia, Vietnam, Nigeria, and Egypt.

Meanwhile Nokia, which has just reported very healthy 2006 figures, estimates industry-wide mobile device sales of 978m units last year and is forecasting “up to” 10% growth for 2007.

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