Handset evolution nears the end of the line

A report suggests that mobile phone sales growth will fall dramatically as manufacturers and operators run out of new features to include
Written by David Meyer, Contributor

Growth in handset sales will soon start slowing down in the developed world as manufacturers and operators run out of new features for phones, a report has suggested.

According to Informa Telecoms & Media's eighth annual "Future Mobile Handsets" report, released on Tuesday, the rate of overall worldwide mobile handset growth will peak in 2007 then fall dramatically.

The global mobile phone market is expected to grow by 15.7 percent this year, but will plummet to only 3 percent in 2011, the report predicted.

"While the mobile market is growing strongly, this will not be maintained over a long period," co-author Gavin Byrne told ZDNet UK on Monday. He explained that most handsets are currently sold in the developing world where, despite "healthier economies and the availability of low-cost, entry-level handsets", people have less money than those in the developed world and the replacement cycle is therefore substantially longer.

As for the developed world, the report says handsets will increasingly support mobile TV, GPS and music playback, but co-author Dave McQueen admitted he "can't think of any other feature set you can put in".

As a result, McQueen said, it was "absolutely inevitable" that developed-world consumers would also start upgrading their handsets less often.

McQueen likened the situation to that currently experienced in the PC market, where upgrades tend to follow new chipsets, better screens and more memory, rather than new features.

"It's a challenge for the operators to generate revenue from features that are [already] in the handset," suggested Byrne, who pointed out that multimedia messaging — until recently seen as a failure — has surged in popularity since higher-megapixel cameras recently began to be included on handsets.

Mobile TV is potentially the "data ARPU [average revenue per user] saviour" for operators, according to McQueen, who added the caveat that user habits and pricing would determine the success of this feature set.

The report suggests that 10 percent of handsets being sold in 2011 will have some form of mobile TV capability, 55 percent will support music playback and 81 percent will have cameras.

However, all these features still have one major obstacle to overcome — battery life.

McQueen pointed out that many users still carry a separate music player despite the capabilities of their new phones, suggesting that "battery technology has not really moved on that much, so it will be interesting to see how that works in the future".

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