Study Finds Increasingly Mature Mobile Market

The cellular handset market, which has experienced impressive double-digit growth the past several years, is continuing to expand but at a slower rate.

Unit shipments in 2005 will reach nearly 520 million, representing a 5.8 percent increase over 2004, according to In-Stat Inc. Approximately 170 million units were shipped in the first quarter of this year, a 6 percent increase from the first quarter a year ago, the Scottsdale, Ariz., research firm said.

The reduced growth pace, said Allyn Hall, director of wireless research at In-Stat, "is the result of some markets being at, or near, full penetration, combined with weaker-than-expected growth in some emerging ones. It's a sign of a maturing market."

Confronted with product saturation in Western Europe and slowing sales in developing countries like India, plus declining average selling prices, handset manufacturers need to develop compelling phones to spike demand, analysts said. Help may be on the way through the imminent widespread deployment of 3G technology, said David Chamberlain, a senior analyst at In-Stat.

"The 3G market has yet to materialize, even though some people were predicting its advent as long ago as 1999. But significant deployment is now beginning to occur, and the availability of good 3G handsets will be the major mobile-phone driver over the next years," Chamberlain said.