The Future of Mobile Handsets

SUMMARY

This report considers the changing nature of a mobile handset and examines the wide range of applications impacting its development, including mobile music, mobile games, mobile TV, mobile camera, mobile camcorder, and mobile organizer. The report provides vendor market share and forecasts for the mobile handset market both in terms of revenue and subscribers for all the regions.

The mobile handset is evolving in two directions. On the one hand, it represents a convergence of feature-sets in a multifunctional device. On the other hand, it represents a divergence of feature-sets in devices focused on specialized applications.

This evolution has turned a mobile handset into much more than a medium for voice communication, enhancing the utility of the device and accelerating its growth. This evolution also means that handset manufacturers need competencies in areas that were traditionally not their domain.

The roll-out of next-generation networks is opening up new frontiers in innovation in mobile handsets. The high speeds made possible by these networks are enabling a slew of new and novel applications. Increasingly, with the proliferation of applications, voice is becoming a secondary factor when purchasing a mobile device.

As high-end markets reach near saturation levels in terms of new subscribers, low-priced handsets are emerging to cater to low-income groups, bringing the mobile phone within reach of all classes of society. Mobile handsets are beginning to penetrate pre-teen and senior citizen market segments, a factor that will make these devices virtually ubiquitous during the forecast period of this report.

The mobile handset market has been witnessing phenomenal growth and mobile devices have been undergoing unparalleled advances. Nevertheless, many mobile vendors are finding it difficult to survive in this market as evidenced by the recent exit of Siemens and Alcatel from this business. The reason primarily lies in the falling prices of mobile devices at the low end and intensifying competition at the high end.

However, prices of mobile handsets will keep shrinking and devices at the lower end will incorporate features found in high-end devices. Both of these factors will propel the growth of mobile handset shipments which will more than double over the next 7 years.

TELECOM TRENDS INTERNATIONAL projects that the number of mobile handsets shipped will increase from 815.2 million units in 2005 to 1,694.4 million units in 2012. The shipments of UMTS handsets, which will grow the fastest, will reach almost 1 billion in this timeframe.

The regions of Middle East & Africa, China, Asia-Pacific, and Latin America will witness double-digit growth in handset shipments over the next 7 years. On the other hand, regions that already have a high penetration of handsets, such as Europe, North America, and Japan, will see a slowdown in growth.

Figure 1 shows vendor market share by shipments as of year-end 2005. During the year, Nokia and Motorola further solidified their already commanding position as handset suppliers. Motorola in particular had a highly successful year, increasing its share by about 2 percentage points.

Despite increase in shipments of the other three major vendors, Samsung, LG Electronics, and Sony Ericsson, their market shares have suffered modest declines. BenQ-Siemens had a dismal year as it slipped from fourth to sixth position.

Mobile handsets generated $117.2 billion in revenue in 2005, an increase of 14.9 percent over the sales in 2004. Mobile handset revenue will peak at $129.9 billion in 2008, and will then begin to decline, reaching $125.0 billion in 2012.

In 2005, Nokia, Motorola, and Samsung garnered a share of over 60 percent of handset revenue. Sony Ericsson was in fourth place in terms of revenue.

TABLE OF CONTENTS

Acronyms

1 Executive Summary

2 Scope and Methodology

• 2.1 Scope
• 2.2 Additional Related Information
• 2.3 Methodology
  • 2.3.1 Interviews
  • 2.3.2 Additional Primary and Secondary Research
  • 2.3.3 Trend Tracking
• 2.4 Target Audience

3 An Industry in Transition

• 3.1 Sales and Acquisitions
  • 3.1.1 Siemens Handset Business Sale to BenQ
  • 3.1.2 Motorola's Acquisition of Sendo Assets
  • 3.1.3 UTStarcom's Acquisition of Audiovox's handset Business
  • 3.1.4 Alcatel's Handset Business Sale to TCL
• 3.2 Mergers and Alliances
  • 3.2.1 Nokia-Sanyo
  • 3.2.2 NEC-Panasonic-Motorola
  • 3.2.3 Motorola-NTT DoCoMo
  • 3.2.4 Casio-Hitachi
  • 3.2.5 Sagem-Ningo Bird and Sagem-Gradiente
• 3.3 Market Strategy
  • 3.3.1 Staying the Course
  • 3.3.2 Changing Directions
  • 3.3.3 Scaling Back
  • 3.3.4 Expanding Market Presence
  • 3.3.5 Entering New Markets

4 The Makeover of the Mobile Handset

• 4.1 Evolutionary Trends
  • 4.1.1 Convergence and Divergence
  • 4.1.2 Role of Network Speeds
• 4.2 Mobile Phone Characteristics
  • 4.2.1 Physical Appearance
  • 4.2.2 Basic Capabilities
  • 4.2.3 Ringtones
  • 4.2.4 Music Players
    • 4.2.4.1 MP3 Phones
    • 4.2.4.2 iTunes
    • 4.2.4.3 Windows Media Audio (WMA)
  • 4.2.5 Game Consoles
  • 4.2.6 Cameras and Camcorders
    • 4.2.6.1 Cameraphones
    • 4.2.6.2 Camcorder Video-capture
  • 4.2.7 TV Phones
    • 4.2.7.1 Digital Media Broadcasting
    • 4.2.7.2 Integrated Services Digital Broadcasting
    • 4.2.7.3 Digital Video Broadcasting
    • 4.2.7.4 MediaFLO
  • 4.2.8 Video Applications
    • 4.2.8.1 Mobisodes
    • 4.2.8.2 Video Calling
    • 4.2.8.3 Video Sharing
  • 4.2.9 Unlicensed Mobile Access Handsets
  • 4.2.10 Wi-Fi-Enabled Handsets
  • 4.2.11 Bluetooth-Enabled Handsets
  • 4.2.12 Universal Plug and Play Handsets
  • 4.2.13 Fashion Phones
  • 4.2.14 Multimedia Messaging Service-Enabled Handsets
  • 4.2.15 Home Networking Devices
  • 4.2.16 Push-To-Talk Phones
  • 4.2.17 Push-To-View and Push-To-All
  • 4.2.18 File-Viewer Phones
  • 4.2.19 Phones with Hard Drives
  • 4.2.20 Visual Caller ID
  • 4.2.21 Fastap Keypad
  • 4.2.22 3-D Movement Recognition
  • 4.2.23 Security-Enabled Handsets
  • 4.2.24 Handsets with Radio-Access
  • 4.2.25 Handsets for Children, Elderly, and the Handicapped
• 4.3 Smartphones, PDAs, Converged Devices
  • 4.3.1 Symbian OS
    • 4.3.1.1 Series 60
    • 4.3.1.2 UIQ
    • 4.3.1.3 Symbian PoC Phones
  • 4.3.2 Windows Mobile Devices
  • 4.3.3 Palm OS Devices
  • 4.3.4 BlackBerry Devices
  • 4.3.5 Linux Devices
  • 4.3.6 Smartphone Market Trends

5 The Marketplace

• 5.1 Growth Factors
• 5.2 Global Handset Revenue
  • 5.2.1 Vendor Revenue
  • 5.2.2 Vendor Share
  • 5.2.3 7-Year Revenue Forecast
  • 5.2.4 Average Revenue per Device
  • 5.2.5 Revenue per Device by Vendor
  • 5.2.6 Quarterly Vendor Revenue
  • 5.2.7 Quarterly Device Revenue by Vendor
• 5.3 Global Handset Shipments
  • 5.3.1 7-Year Shipments Forecast
  • 5.3.2 Annual Shipments by Vendor
  • 5.3.3 Year-over-Year Growth
  • 5.3.4 Quarterly Shipments
• 5.4 Regional Handset Shipments
  • 5.4.1 Annual Shipment by Region
  • 5.4.2 Market Growth by Region
• 5.5 Vendor Shipments by Region
  • 5.5.1 Europe
  • 5.5.2 Middle East & Africa
  • 5.5.3 Japan
  • 5.5.4 China
  • 5.5.5 Asia-Pacific
  • 5.5.6 North America
  • 5.5.7 Latin America
• 5.6 Regional Shipments by Vendor
  • 5.6.1 Nokia
  • 5.6.2 Motorola
  • 5.6.3 Samsung
  • 5.6.4 LG Electronics
  • 5.6.5 Sony Ericsson
  • 5.6.6 BenQ - Siemens
  • 5.6.7 Others
• 5.7 Global Shipments by Technology
  • 5.7.1 Market Share by Technology
  • 5.7.2 UMTS Handset Shipments
  • 5.7.3 GSM Handset Shipments
  • 5.7.4 CDMA Handset Shipments
  • 5.7.5 Remaining Technologies' Handset Shipments
• 5.8 Global Technology Shipments by Vendor
  • 5.8.1 CDMA Handset Shipments by Vendor
  • 5.8.2 GSM Handset Shipments by Vendor
  • 5.8.3 UMTS Handset Shipments by Vendor
• 5.9 Global Vendor Shipments by Technology
  • 5.9.1 Nokia
  • 5.9.2 Motorola
  • 5.9.3 Samsung
  • 5.9.4 LG
  • 5.9.5 Sony Ericsson
  • 5.9.6 BenQ-Siemens
  • 5.9.7 Others
• 5.10 Mobile Handset Replacement Rate

6 Vendor Profiles

• 6.1 Nokia
  • 6.1.1 Market Position
  • 6.1.2 Market Strategy
  • 6.1.3 Product Strategy
  • 6.1.4 Model Types Shipped
• 6.2 Motorola
  • 6.2.1 Market Position
  • 6.2.2 Market Strategy
  • 6.2.3 Product Strategy
  • 6.2.4 Model Types Shipped
• 6.3 Samsung
  • 6.3.1 Market Position
  • 6.3.2 Market Strategy
  • 6.3.3 Product Strategy
  • 6.3.4 Model Types Shipped
• 6.4 LG Electronics
  • 6.4.1 Market Position
  • 6.4.2 Market Strategy
  • 6.4.3 Product Strategy
  • 6.4.4 Model Types Shipped
• 6.5 Sony Ericsson
  • 6.5.1 Market Position
  • 6.5.2 Market Strategy
  • 6.5.3 Product Strategy
  • 6.5.4 Model Types Shipped

7 Conclusions and Recommendations

• 7.1 Mobile Penetration Trends
• 7.2 Next-Generation Networks
• 7.2 Challenges Facing the Industry
• 7.3 Innovation as Market Driver
• 7.4 Emerging Developments
• 7.5 Recommendations

List of Tables

• Table 1: Wi-Fi Standards and Data Rates
• Table 2: Vendor Revenue and Handset Shipments - 2005
• Table 3: Vendor Revenue and Handset Shipments - 2004
• Table 4: Quarterly Revenue by Vendor - 2005
• Table 5: Annual Revenue and Handset Shipments - 2004-2012
• Table 6: Quarterly Revenue per Device Shipped
• Table 7: Annual Handset Shipments by Vendor - 2004 & 2005
• Table 8: Quarterly Handset Shipments by Vendor - 2005
• Table 9: Handset Shipments and Market Share by Region - 2005
• Table 10: Handset Shipments Forecasts by Region - 2005-2012
• Table 11: European Handset Shipments by Vendor - 2005
• Table 12: Middle East & Africa Handset Shipments by Vendor - 2005
• Table 13: Japanese Handset Shipments by Vendor - 2005
• Table 14: Chinese Handset Shipments by Vendor - 2005
• Table 15: Asia-Pacific Handset Shipments by Vendor - 2005
• Table 16: North American Handset Shipments by Vendor - 2005
• Table 17: Latin American Handset Shipments by Vendor - 2005
• Table 18: Nokia's Handset Shipments by Region
• Table 19: Motorola's Handset Shipments by Region
• Table 20: Samsung's Handset Shipments by Region
• Table 21: LG's Handset Shipments by Region
• Table 22: Sony Ericsson's Handset Shipments by Region
• Table 23: BenQ-Siemens' Handset Shipments by Region
• Table 24: Other Vendors' Handset Shipments by Region
• Table 25: Handset Shipments by Technology - 2005-2012
• Table 26: CDMA Handsets - Vendor Shipments and Market Share
• Table 27: GSM Handsets - Vendor Shipments and Market Share
• Table 28: UMTS Handsets - Vendor Shipments and Market Share
• Table 29: Nokia's Handset Shipments by Technology
• Table 30: Motorola's Handset Shipments by Technology
• Table 31: Samsung's Handset Shipments by Technology
• Table 32: LG's Handset Shipments by Technology
• Table 33: Sony Ericsson's Handset Shipments by Technology
• Table 34: BenQ-Siemens' Handset Shipments by Technology
• Table 35: Other Vendors' Handset Shipments by Technology
• Table 36: Replacement Rate and New Subscribers - 2005-2012

List of Figures

• Figure 1: Handset Market Share by Vendor - 2005
• Figure 2: Mobile Device Categories
• Figure 3: Motorola's RAZR V3m
• Figure 4: Sony Ericsson's W900 with Headset
• Figure 5: Nokia's N-Gage QD
• Figure 6: Samsung's SCH-V770
• Figure 7: Motorola's O ROKR
• Figure 8: LG's Migo
• Figure 9: Handset Revenue by Vendor - 2005
• Figure 10: Handset Revenue Market Share by Vendor - 2005
• Figure 11: Handset Revenue by Vendor - 2004
• Figure 12: Handset Revenue Market Share by Vendor - 2004
• Figure 13: Handset Revenue Forecast - 2005-2012
• Figure 14: Average Revenue per Device
• Figure 15: Handset Shipments Forecast - 2005-2012
• Figure 16: Handset Shipments by Vendor - 2005
• Figure 17: Handset Shipments Market Share by Region - 2005
• Figure 18: Handset Shipments Market Share by Region - 2012
• Figure 19: Handset Shipments by Region - 2005-2012
• Figure 20: European Handset Shipments Forecast - 2005-2012
• Figure 21: Middle East & Africa Handset Shipments Forecast - 2005-2012
• Figure 22: Japanese Handset Shipments Forecast - 2005-2012
• Figure 23: Chinese Handset Shipments Forecast - 2005-2012
• Figure 24: Asia-Pacific Handset Shipments Forecast - 2005-2012
• Figure 25: North American Handset Shipments Forecast - 2005-2012
• Figure 26: Latin American Handset Shipments Forecast - 2005-2012
• Figure 27: Handset Shipments Market Share by Technology Family - 2005
• Figure 28: Handset Shipments Market Share by Technology Family - 2012
• Figure 29: Handset Shipments by Technology Family - 2005-2012
• Figure 30: UMTS Handset Shipments - 2005-2010
• Figure 31: GSM Family Handset Shipments - 2005-2010
• Figure 32: CDMA Family Handset Shipments - 2005-2012
• Figure 33: Handset Shipments by Other Technologies- 2005-2012
• Figure 34: Handset Replacement Rate - 2005-2012