3G Handset Market to Exceed 1.3 Billion Units in 2010

With total revenues estimated at US$616 billion in 2006, mobile services have generated the bulk of the increase in the telecom services market says a new report from IDATE. Growth in the mobile sector comes from enlargement of the subscriber base. Having passed the 2 billion mark in 2005, the number of mobile costumers throughout the world reached 2.6 billion by the end of 2006. At the same time, however, the ARPU has declined (down 10% in 2005 and 2006).

In Western Europe, cuts in the rates for fixed-to-mobile call termination charges have largely contributed to the fall, but are not the sole explanation. The increasing numbers of cut-price services being offered by MVNOs in Northern Europe, the arrival of "3G" in several markets, and growing competition in general have had a heavy impact on tariff rates. Although most operators have rolled out 3G services, migration towards these services has been relatively slow (9% of mobile costumers possessed a 3G handset in mid-2006) and is not having much of an impact on operators' revenues.

The year 2006 was marked by a certain number of achievements:

• Significant 3G take-off, with 100 million UMTS costumers worldwide at the end of the year,
• First commercial HSDPA mobile broadband,
• Introduction of Fixed-Mobile convergence offers in Europe.

Mobile Terminals

IDATE now expects the global mobile terminal market size for 2006 at 977 million units up from 836 million units in 2005, i.e. more than 17% growth. In the long term, the mobile terminal market is now forecasted at 1,350 million units in 2010, i.e. a CAGR of 8.42% from 2006.

Market development in value

The global mobile terminal market revenues for 2006 expected to reach US$117 billion up from 110 billions in 2005, i.e. +6%, due to a decrease in the ASP driven by stronger than expected market growth in the emerging markets and significant competition on high-end handsets.

In the long term, the mobile terminal market is forecasted at US$128 billion in 2010, i.e. a CAGR of 2.4% from 2006.

3G market

For 2006, IDATE forecasts the 3G market at 78 million units, i.e. 8% of the total mobile terminal market. By 2010, the 3G market will account for 259.1 million units, i.e. 19.2% of the total market volume

Mobile terminal market shares

In Q3 2006, the largest vendor Nokia continued to grab market share in volume significantly thanks to outstanding performance. Motorola's market share decreased to 21.9% but remains out of reach: Samsung's market share increased to 12.5%.

Sony Ericsson reinforced its #4 position. LG is now the last actor of the top 5 with stable market share. Finally, other vendors' market share drop bellow 15%.

Mobile Infrastructure

The market for mobile access infrastructure includes base stations for access to mobile networks (BTS for GSM/GPRS/EDGE networks and CDMA and Nodes B for UMTS networks), their related equipment (base station controllers, GGSN, SGSN) as well as base stations for access to public WLAN networks (P-WLAN) also called hotspots.

Market trends by technology

GSM/GPRS/EDGE

GSM technology and its associated 2.5G technologies (GPRS and EDGE) have confirmed their strong dominance in the mobile access segment worldwide (85% of 2G and 2.5G costumers), with a growth of 30% (growth equal to that of 2004) to reach more than 1.6 billion costumers at the end of 2005.

This growth in absolute value was based essentially on emerging regions (Latin America, Central and Eastern Europe, Africa and the Middle East), which collectively represented 55% of worldwide growth in 2005, and by the Asia/Pacific region with generated 31% of the worldwide growth during the year, especially driven by China and India which together generated 20% of the worldwide growth in the GSM subscriber base.

CDMA IS/95 and 1x 2000

CDMA IS/95 and 1x 2000 saw the growth of its worldwide subscriber base accelerate in 2005 (+22% compared to +18% in 2004), even though this does not match the growth of the GSM market. Almost 50% of this growth came from Asia/Pacific, especially India (14% of worldwide growth), China (10%) and other countries such as Malaysia and Indonesia. Latin American also contributed to the momentum of the CDMA 2/2.5G market, while the North American market remained a significant outlet even though less dynamic (+12% growth in 2005) based on migration to CDMA EV-DO by Verizon and Sprint.

UMTS

As far as 3G, 2005 was a decisive year in large scale commercialisation of UTMS technology. The UMTS subscriber base grew more than 170% to reach more than 45 million costumers by the end of December 2006 should see this trend confirmed with expected subscriber base growth of more than 130%. If the Japanese market is by far the market of reference, strong development in the Italian and English markets make Europe the largest 3G region in the world.

CDMA EV-DO

CDMA EV-DO, a 3G technology from the CDMA world, is also developing at a sustained rate even though less than UMTS. The net slowdown in the growth of the primary market for this technology, South Korea, poses real questions as to this technology's prospects. In effect, the two leading South Korean operators (KTF and SK Telecom) have decided to gradually migrate to HSDPA. However, the selection by KDDI in Japan and Verizon and (to a lesser degree) Sprint in the United States in favour of this technology seems to strengthen it."

Posted to the site on 16th July 2007