World's Handset Shipments to Reach 412 Million Units in 2001

Worldwide handset shipments will reach 412 million units in 2001, an anemic year-on-year increase of 3 percent from 2000, according to the latest research results released by International Data Corporation (IDC).

Despite the market's lackluster performance, new research from IDC shows the worldwide handset market is still on the track to realize a 2000-2005 growth rate of 10.9 percent, shipping 672 million units in 2005.

"The handset industry has been cursed by its own hyperbole and has failed to deliver what was expected of it," said Weili Su, senior analyst for IDC's Smart Handheld Devices program.

A souring telecom sector, uncertainties associated with next- generation network rollouts, and the delays in the availability of 2.5G and 3G handsets have cast a dark cloud over the visibility of the near- and medium-term market conditions, Su said.

Increasingly, the prospect of a recovering handset business will be dependent on the replacement market. However, given the recent delays and postponements in next-generation network deployments in each region, the replacement market will likely suffer from a weak 2.5G and 3G handset offering associated with the timing of network rollouts.

Handset manufacturers are now acutely aware of and just coming to grips with the technical difficulties that need to be tackled in order to offer the capabilities promised by 2.5G and 3G services.

Worsening economic conditions will also impact the handset market.

"With an IT recession in the United States and deteriorating conditions in Europe and Asia, handset manufacturers and wireless carriers will be faced with slumping consumer demand despite any new services they may roll out over the next year," said Randy Giusto, vice president of IDC's Mobile and Desktop research.

While a near-term rebound in the handset market is doubtful, in the long run, the advent of 2.5G and 3G will undoubtedly be the engine driving handset growth as compelling content and applications become available to users at a reasonable cost. It is the promise of a truly mobile Internet and its associated revenue potential that are shaping the current market dynamics.

"As the 3G evolution continues, a host of participants up and down the mobile communications value chain are all jockeying for positions in this changing landscape," Su added.

IDC's new report, Erratic Signal: Worldwide Handset Market Forecast and Analysis, 2000-2005, reviews the market's 2000 performance and forecasts shipments by air interface technology and region through 2005.

The report also provides snapshots of leading handset vendors and regional trend analysis. Additionally, the report addresses major macro trends impacting the industry, such as the migration schedule to 3G infrastructure and services and the emergence of future content and applications.






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