Global mid-tier mobile phone market collapses

Davey Winder
Monday, 18 May 2009 18:25

Your IT - Mobility

The latest victim of the global recession would appear to be the seemingly unstoppable mobile phone sector if the latest market forecasts are to be believed.

Between the ongoing success of the Apple iPhone and more recently the RIM BlackBerry, plus the surge in popularity of Google Android, the last thing you might imagine is any kind of collapse in the mobile phone market.

Yet that is exactly what updated forecasts from Ovum, to be found in the 'Mobile phone forecast pack 2008-2014' report, would seem to be suggesting.

Not only does Ovum say that global mobile phone shipping volumes will be down by 9.1 percent by the end of the year, but it insists the downturn will hit even regions in emerging markets. Ovum says we should not expect to see 2008 levels return until at least 2012.

It also reveals that the economy has, perhaps unsurprisingly, hit those handsets which are neither budget models not smart phones the hardest. Ovum refers to 2009 as having already witnessed the collapse of the market for these mid-tier handsets.

"This has had a polarizing effect on the handset market with vendors and mobile operators focusing on two types of handset: those targeting the low-end and high-end segments"  co-author of the report, Adam Leach, says.

"This in turn has quickened the replacement of 2G in favour of 3G handsets, with high-end 2G handset shipments suffering the most from the shift" Leach adds.

You might imagine that the economy would have somewhat artificially extended replacement rates for handsets this year, with consumers hanging on to their mobiles for longer when money is tight. Yet Ovum warns that with the middle-ground mobile market collapsing, and more of a focus on high-end 3G models, the replacement cycle could get even longer.

It says that mobile phone shipments will grow at a Compound Annual Growth Rate (CAGR) of 1.9 percent and reach 1.4bn by 2014.

"The primary upside driver for growth is from volumes in emerging markets" Leach concludes "Connection growth in these regions is still fuelling handset shipments; however, shipment growth will trend below connection growth due to a strong second-hand market in these regions."