Handset Market Shows Signs of Life

Despite being tied to the ailing telecom industry, the worldwide handset market is rebounding from its worst year ever, according to a recent IDC report.

Handset shipments increased globally by 1.8%, according to research by Framingham, Mass.-based IDC. In 2001, shipments had dropped by 4% from 2000 levels. And this year’s upward trend is expected to continue. IDC is predicting a 9.5% growth rate over the next four years, with numbers growing from 391 million in 2002 to 606 million in 2006.

”A wireless revolution is waiting in the wings,” says Kevin Burden, program manager for IDC’s Smart Handheld Devices unit. ”when mass wireless adoption occurs, it will result in a paradigm shift comparable to that created by the World Wide Web. However, until that happens, handset vendors must continue to research and develop enhanced features and functionality that will drive higher average revenue per user.”

Burden is predicting that modest growth in the handset market will come from first-time buyers and new subscribers to emerging markets. However, replacement sales in mature markets will be the key piece of the overall market growth.

Any kind of market explosion, according to Burden, will depend on the development of next-generation networks, along with compelling content and applications.

While digital handsets grow in market and mindshare, analog handsets will fall out of the market by 2003, IDC predicts. And shipments of 2.5G handsets will surpass 2G handsets by 2005.