U P DAT E
CONVERGENCE UPDATE
Informa Telecoms & Media America, Western Europe, and off-the-shelf solutions, price as Nokia, Apple, and Sony-
in its latest ‘Future Mobile Japan. However, this growth competition is expected to Ericsson are seeking to create
Handsets’ report. Emerging will only help offset the sharp increase significantly, requiring end-to-end ecosystems linking
markets, including Brazil, decline of non-Smartphone suppliers to generate significant their devices to services they
Russia, India, and China market value. economies of scale. offer. Not only will this enable
(BRIC) and Africa, will them to differentiate themselves
make up the majority global Handset market volume sales in The mobile handsets industry by offering enhanced user
handset market value, with developed regions are reaching is also turning its interest to experience to their customers
60% share in 2013. Growth saturation, leading to increasing open-source, a community but will also create new revenue
disparities between developed competition between handset based approach, which promises opportunities for them by either
OEMs. Informa reckons price vendors a reduction in or the delivering their own services or
wars will only intensify at elimination of royalties related partnering with mobile opera-
a time when new entrants to terminal software and will tors to deliver these services.
such as Apple and Google are also help them lower the cost
increasing their pressure on of maintaining commoditised The preceding contrasts with
competitors to reduce their software because, under open projected healthy growth in
prices mainly for feature phones source rules, this cost is shared emerging markets. Informa
and Smartphones. “With the among all members of the calculates that the value gener-
ongoing fall of feature phone community rather than being ated by mobile phone sales in
and Smartphone ASPs, several borne by a single vendor. these geographies will continue
and emerging markets will leading handset vendors are to grow aggressively throughout
become apparent within the now looking for new ways of With all these efforts OEMs the forecast period; the CAGR
next five years. controlling handset manufactur- will find it hard to maintain for 2007 to 2013 in India and
Growth will not exceed 2% ing costs in order to maintain feature phone and Smartphone China will be 15.5% and 9.7%,
CAGR in developed markets margins”, observes Malik Saadi, margins in the future. This is respectively. The value of the
according to the report. principal analyst at Informa due to growing competition in Chinese market is set to reach
Handset market value growth Telecoms & Media and co- these market segments involv- US$21 billion in 2013 - 10%
rates are slowing significantly author of the report. “With this ing different types of vendors market share - up from US$12
in these developed markets and, in mind, vendors have already including incumbent OEMs, billion in 2007, while India's
if the current economic slow- shifted the majority of produc- consumer electronics vendors, handset market value will grow
down persists, could even turn tion plants into low labour cost PC vendors, and Internet from US$7.3 billion in 2007 to
negative after 2009. Informa regions such as China, Taiwan, content providers. “Looking US$17.4 billion in 2013. The
does not expect revenue growth India, Vietnam and Eastern forward, it is becoming clear African market is also expected
from mobile phone sales to Europe and now they have to that, in these regions, handset to grow massively from US$7.7
exceed 2% CAGR in Western play the only remaining card: vendors can no longer rely on billion in 2007 to about USS13.6
Europe, 1% in North America, lowering the bill they pay for mobile phone sales to sustain billion in 2013.
and less than 0.5% in Japan chipsets and terminal software.” growth. They will have to
between 2010 and 2013. In look at other opportunities, for In the emerging markets,
these regions, the Smartphone Device vendors have tradition- example getting involved in device vendors will have a
market will represent the major ally relied on customised content creation and service vested interest in creating
growth area. Revenues from chipsets for powering their offering,” believes Saadi. additional distribution channels
this type of phone will repre- products. Now that modem Informa reports this trend and will have to work closely
sent more than 55% of total chips are becoming a commod- is already happening as a with mobile operators to boost
handset market value in North ity, and vendors are adopting number of device vendors such sales of devices as the growth
 I
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