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Global Mobile Industry to Lose $20 Billion in 2009

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Note -- this news article is more than a year old.

Short term cost cutting may be a detriment to long term health according to TNS' Global Telecoms Insights study, which monitors over 20,000 consumers in 32 markets. Although consumers are suffering the effects of the recession now, the TNS study reveals that they will be demanding new and improved products as early as 2010 and mobile handset manufacturers need to be ready.

Globally, the number of consumers looking to purchase a mobile phone in the next six months fell from 28% 12 months ago to 23% now, leaving a potential black hole of $20bn, based on spending patterns from 2008, for the industry as a whole. This is particularly noticeable in emerging markets where handset sales are not subsidized and incomes are lower, for example in China this decrease is a fall from 32% to 24%. On top of delaying purchases, consumers are looking to cut back on their monthly spend as well, hurting service providers.

However, despite these cut-backs, consumers appear unwilling to downgrade from their current device. When asked about how much they intended to spend on their next mobile phone the average consumer globally claims to be willing to pay more for their next handset than they paid for their last one. This is being driven by excitement over the latest devices in the market. Despite only 5% of consumers owning a Qwerty (a phone with a keyboard-style key pad) or Touchscreen device globally, 13% say they will buy such a device for their next purchase. In the US, this is a figure is as high as 35%, reflecting the success of the iPhone and BlackBerry brands.

Sam Curtis, Sector Development Manager, TNS Technology said: "The mobile phone is such an important part of people's lives that they do not want to compromise on their current experience, if they can possibly afford it. They would rather wait and weather the current storm, and then upgrade significantly when they can afford to, rather than compromise at their next purchase. New products in the market have re-invigorated the category and fueled these aspirational desires."

New devices are also rapidly changing consumer preferences in many markets offering opportunities to sell multi-functional devices. In France, 21% of consumers say that GPS is an important driver of choice for their next mobile purchase compared to only 4% a year ago, while in Korea, 33% of consumers are looking for a strong mobile TV application on their phone compared to 20% a year ago. With new functionalities will come additional revenue opportunities for manufacturers and service providers alike.

Curtis continues: "When the economic situation improves and consumer confidence is restored, the market will be flooded with buyers eager for new and exciting products. With product development cycles of 12-18 months, it is the companies that are investing now that will reap the benefits of this upsurge. Companies that are too cautious during this difficult time could miss a huge opportunity if their product portfolios are not relevant to the 2010 consumer."

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