Mobile Confidence Set to Fall in the First Half - Report

Mobile Ecosystem projects that the wireless industry downturn will continue at least through the first half of 2003, according to the latest data from the Mobile Confidence Index(tm). The Index, a report on the state of the U.S. wireless industry, registered a 6% decline in December 2002 and was flat for the quarter. As of Jan. 1, the Index stands at 112 (January 1998 = 100), down from 119 in November. For the year, the Index was essentially flat, "an indication that the industry might have hit bottom," says Mark Lowenstein, Mobile Ecosystem's Managing Director. The Index's all-time high is 238, reached in September of 2000. The all-time low is 80, dating back to January 1997.

Developed by Mobile Ecosystem, the Mobile Confidence Index tracks 13 leading wireless indicators across several categories, including financial, industry performance, marketing, advertising, employment, and innovation metrics. Launched in January 2002, the Index tracks data going back six years.

Source: Mobile Ecosystem monthly report, January 2003

In December the Index was dragged down by the continued decline in venture capital investing, which now stands at 40% of the historical average and is back to 1998 levels. Also affecting the Index was the flat to decreasing industry revenues, caused by slowing subscriber growth and continued price erosion plus lowering carrier capex. While the number was quite strong during 2002, the projected capex decline for 2003 could cause a major drag on the Index.

"There are some bright spots, however," according to Lowenstein. The number of wireless patent grants is at an all time high, which shows continued innovation in the sector. Wireless carrier print advertising remained strong based on data from Mobile Ecosystem's partner, Adspies (A pity they don't advertise here more often though. Ed.)

Mobile Ecosystem projects that the Mobile Confidence Index will remain flat to down for the first six months of 2003. "We expect the 'wireless buzz' and advertising metrics, which propped up the Index during much of 2002, to tail off following the major fourth quarter push," says Lowenstein. "Wireless data is not yet a catalyst, although handset sales and replacement rates are trending upward."

Posted to the site on 17th January 2003