Handset-shipment projections deemed anemic in 2001

According to IDC, (www.idc.com) handset shipment projections for the next five years could be a bit erratic. But despite the expected lackluster year 2001, the research company still expects that by 2005, things will get back on track with help from 3G capabilities.

“Erratic Signal: Worldwide Handset Market Forecast and Analysis, 2000-2005,” released this week, stated that worldwide handset shipments will reach 412 million units in 2001, an increase of just 3% from 2000.

The report said that the prospect of a recovering handset business will depend on the replacement market. However, given the recent delays in next-generation network deployments in each region, the replacement market will likely suffer from a weak 2.5G and 3G handset offering associated with the timing of network roll-outs. As evidenced by the delay of GPRS handsets, handset manufacturers are now acutely aware of and just coming to grips with the technical difficulties that need to be tackled in order to offer the capabilities promised by 2.5G/3G services.

Worsening economic conditions will also affect handset sales. According to Randy Giusto, IDC mobile and desktop research vice president, with an IT recession in the United States and deteriorating conditions in Europe and Asia, “handset manufacturers and wireless carriers will be faced with slumping consumer demand despite any new services they may roll out over the next year.”

Despite these current gloomy days, the handset market appears to be on the right long-run track. IDC reported that the market is expecting a 2000 to 2005 compound annual growth rate of 10.9% shipping 672 million units in 2005. Also, IDC stated that even though 2.5G and 3G handsets are now suffering, the advent of 2.5G and 3G will undoubtedly be the engine driving handset growth as compelling content and applications become available to users at a reasonable cost.

According to Weili Su, IDC smart hand-held devices program senior analyst, it is the promise of a truly mobile Internet and its associated revenue potential that are shaping the current market dynamics.

“As the 3G evolution continues, a host of participants up and down the mobile communications value chain are all jockeying for positions in this changing landscape,” Su said.