High-End, Low-End Cell Phones To Gain Share

Midrange phones will be overtaken by smartphones and entry-level phones by 2013, ABI Research said.
The wireless handset market will see significant growth at the top and bottom ends of the feature and price ranges, according to a report from ABI Research.

The report, titled "Mobile Devices Annual Market Overview," said this growth will come at the expense of the midrange phone market, commonly called enhanced phones. Although 854 million midrange phones were shipped in 2007, making it the largest cell phone market segment, it will be overtaken by both other classes in 2013, ABI said.

"As we see more user sophistication and demand for high-end features, handset manufacturers will continue to push functions of high-level smartphone operating systems further down their product lines," ABI Research director Kevin Burden said in a statement.

Wireless operators want more smartphone users because these subscribers generate more revenue from data plans. For example, users of the upcoming iPhone 3G have to pay at least $69.99 a month for service, while plans for midrange phone subscribers start at $39.99.

Smartphones are also an ideal content delivery platform, and this represents an additional revenue stream for wireless carriers.

Driven by the large emerging markets in countries such as Brazil, China, and India, low-cost cell phones are set to become the largest class of cell phones shipped by 2013. But, because these phones will be sold at a low price, they will not be large revenue generators.

"While the unit shipments of ultra-low-cost handsets will be dramatic over the forecast period, the device class is only expected to account for 6% of the market's overall revenue," said Burden. "But vendors will continue to pursue these markets for the sake of brand-building and the prospect of eventual upward migration by users."

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