Asia Pacific to spur mobile phone growth: Gartner

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Mumbai, Aug 5: Asia Pacific (APAC) is expected to witness the highest sale of mobile phones to reach 472.5 million units in 2008, a 17.9 % increase from 2007, according to Gartner Inc. In contrast, mobile phone sales in Western Europe and Japan are expected to decline by 1.5 % at 188 million units and 9.1% at 47.7 million units respectively from last year while North America will see just 5.3 % increase at 185.7 million units.

According to Gartner, mobile phone sales growth will increasingly rely on emerging markets as mature regions, such as Western Europe, Japan and North America reach saturation.

Carolina Milanesi, research director for mobile devices at Gartner, based in Egham, UK, said, “All hopes for mobile phone manufacturers for the overall year-end growth results rest on the final quarter of the year when most new products will be introduced to the market and the normal seasonality will help boost sales.”

She added that for the second half of the year, sales in the third quarter are expected to be more than the second quarter results, but only moderately as both Motorola and LG issued warnings for a sequential drop in sales, as well as an economic environment that remains challenging.

Worldwide mobile phone sales in the first quarter of 2008 reached 294.3 million, and Gartner expects sales in the second quarter of 2008 to be between 300 million and 305 million units.

“With a more mature market, mobile operators are seeing their service revenue come under pressure and, driven by lower flat-rate tariffs, demand for data services is starting to pick up, increasing demand for network investment,” Milanesi added. “Cost control and putting pressure on supplier pricing are the business norm of operators. Hence, mobile device vendors are experiencing increased pressure on device pricing.”

The report also has identified five major trends that will impact the mobile device market through 2009. It mentions that established vendors will consolidate and new players will join the fray. New device vendors, such as Apple and Garmin, are looking to differentiate themselves, while big-name vendors, such as Motorola, face pressure as marketshares decline and design innovation becomes increasingly challenging.

Pressure from operators to lower the price of devices will drive some established players to seek out new sources of revenue from content and services sold to end users.

This trend is epitomised by Nokia with Ovi, Sony Ericsson with PlayNow and Apple with its iTunes store.