Handset-hungry consumers want 3G says IDC

Third generation phones will keep market buoyant
Written by Matt Hines, Contributor

Third generation phones will keep market buoyant

Increased adoption of third generation wireless phone technology should help sustain record growth in the mobile handset market. According to the latest research from IDC, worldwide mobile handset shipments for 2004 will total more than 500 million units. IDC estimates that some 460 million mobile phones will be shipped before the end of 2003. If the 500 million units are sold in 2004, that would represent an eight per cent year-on-year increase for the mobile industry, based on IDC's numbers. IDC analyst Alex Slawsby said the primary driver of mobile market growth would be adoption of 3G technology. Third generation wireless networks are expected to deliver an array of new products and services to mobile phone users such as games, streaming media and cameras. IDC reported that, as the number of mobile phone users worldwide nears 1.4 billion in 2004, it expects 42 per cent year-on-year growth in the lower-tech 2.5G market, with vendors shipping more than 241 million units. The research company expects shipments of 3G mobile phones to surpass 48 million units in 2004, which represents a 140 per cent growth during 2003. "It looks like 3G becomes a reality for the first time in 2004, with handsets and services coming to market that will finally put the technology in a lot of people's hands," Slawsby said. "It will be up to consumers to decide just how quickly the market can grow." Another catalyst for growth in the worldwide market would be the continued development of emerging markets such as Eastern Europe and Africa, where establishing basic telephony capabilities remains the primary motivator of mobile phone adoption, Slawsby said. However, that growth should be overshadowed by demand from existing mobile phone users in established markets such as North America and Western Europe that are upgrading to new technologies, according to the analyst. "The biggest factor for market expansion will be users' recognition that newer technologies, in terms of both the phones and 3G services, are worth spending the money," Slawsby said. "Mobile phones continue to become a more important part of daily life, and as users have positive experiences with new services, they'll become more willing to upgrade." One of the features expected to lure consumers into spending on 3G hardware and services are camera phones that offer digital image capture technology within mobile handsets. IDC predicts that that segment will grow by 64 per cent in 2004, to nearly 100 million units. IDC said it expects nearly 30 million converged mobile devices, or smartphones, to be sold in 2004, which represents growth of 111 per cent. Beyond flashy gizmos, Slawsby said it would also be critical for 3G mobile service providers to develop compelling content to pique the interest of handset buyers. Among the applications Slawsby thinks could help drive demand are improved functionality for games and other multimedia-rich services such as digital televisions. Matt Hines writes for CNET News.com
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