After Boom Years, Wireless Industry Faces Slowing Growth

ISuppli predicts global mobile phone subscriber growth will decelerate to 12.8% in 2007, down from average annual growth rates of 25% the past three years.

The vendors and participants at the 3GSM World Congress in Barcelona, Spain, this week may be unveiling a wide range of new mobile phone-based products and services, but their biggest challenge isn't the competition -- it's the fact that wireless growth is poised to slow dramatically.

Market research firm iSuppli said that even the latest smartphones aimed at developed markets and ultrainexpensive phones aimed at the Third World and developing nations won't halt the decline in subscriber growth and the growth of phone sales.

"The slowdown in new subscriber growth and the deceleration in mobile-phone sales translates directly into deteriorating market conditions for wireless carriers," said Dr. Jagdish Rebello, iSuppli's director and principal analyst, in a statement.

The market research firm predicted that global mobile phone subscriber growth will decelerate to 12.8% in 2007, from average growth rates of 25% in 2004, 2005, and 2006. The decline is expected to continue in subsequent years, dropping to 9.6% in 2008, 7% in 2009, and 5.7% in 2010.

As expected, the manufacture and sales of mobile phones is likely to track subscriber growth, according to the iSuppli report, which was announced to coincide with the Barcelona event. The firm forecast a mobile phone production growth rate of 9.1%, down from the average growth rate of 19.3% for the preceding three years. Production rates are expected to continue to decline to 6.9% in 2008, 4.8% in 2009, and 3% in 2010.

"Carriers and their mobile phone suppliers need new strategies to counter the impact of this phenomenon," said Rebello.

To stimulate growth, iSuppli suggests that wireless carriers provide a new range of advanced services like Web access and music and TV playback for users in advanced industrialized nations. The market research firm suggests that ultralow-cost handsets can stimulate growth in Latin America, China, Africa, the Middle East, Australia, and India.

"For India and other developing regions, the next phase of growth will be driven by low-end phones," said Rebello, who noted that India in particular could enjoy rapid handset growth. Cell phone penetration in India is just 13.5% in 2007, iSuppli said, while the predicted penetration will rise to 31.5% in India in 2010.

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