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Replacements Will Soon Drive Mobile-Phone Market

Mobile-phone production will continue to grow, but the drivers of the business will shift from purchases by new subscribers to replacement handset purchases.

Mobile phone production will continue to grow but the drivers of the business will shift from purchases by new subscribers to replacement handset purchases, a market research survey said Thursday.

While more handsets are expected to sell this year, the rate of growth is decelerating, said iSuppli. Mobile phone production in the first quarter of 2005 was 173 million units, which was up slightly from the 169.5 million units sold in the same quarter in the year before. The firm predicted that the second quarter will record about 180.5 million portable phones shipped " up about 7 percent from a year earlier.

iSuppli predicted that 750 million mobile phones will ship in 2005 and while that number was well above the 713 shipped units from the year earlier, the market research company said some markets were becoming saturated. "With such a huge quantity, the law of large numbers begins to take effect, and a major growth margin becomes difficult or impossible to achieve," the firm stated.

Although subscriber growth continues " predicted to rise from 1.6 billion to 1.9 billion subscribers in 2005 " production this year and following years will be driven by replacement phones.

iSuppli looks for 3G phones using CDMA2000 1xEV-DO and W-CDMA as well as digital cameras and MP3 music playback phones to drive the replacement market.

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