Global mobile handset manufacturers have to resort to innovative marketing strategies to stop the slide in market fortunes. They must look beyond the traditional market and move up or down the value chain to find better opportunities for market share and revenue growth.
New analysis from Frost & Sullivan reveals that the market generated revenue of US$126.28 billion in 2004. This figure projects to decline to US$106.59 billion in 2010.
One of the newer revenue streams is the youth market, which is now at the forefront of technology adoption in the global handheld devices market. This market segment is leading the way for the adoption of premium content and applications.
"The less price-sensitive early adopters from the 13-25 age group could primarily drive the initial growth," says Frost & Sullivan Industry Analyst Daniel Longfield. "In fact, growth in mobile products such as ringtones, games, and graphics is expected to displace spending on many traditional youth products such as music, clothing, and movies."
Currently, the youth segment's spending on premium mobile ringtones accounts for the majority of the overall market revenue. Downloadable and interactive gaming concepts could also catch on in this population segment and provide long-term revenue growth.
Other methods to ensure a constant stream of revenue include developing relationships in emerging regions so that mobile handset companies can better understand these new markets. Regulators in such areas are contemplating collective buying to reduce device prices and increase wireless penetration.
"Vendors should also augment this drive to create large economies of scale so they can sell lower priced handsets at reasonable profit margins to emerging nations," notes Longfield. "Over time, subscribers in emerging nations may upgrade devices, widening the profit margins for market participants."
To give consumers a push in the right direction, global handset manufacturers must sell the smart phone concept to the current base of mobile device users.
Most mobile users have to carry three digital devices: a notebook computer, a personal digital assistant (PDA), and a mobile phone. Smart phones, which combine the functions of all three, could be a huge hit among these consumers.
Most of these same users would acknowledge the inefficiency of carrying all three devices, but such a strategy is often necessary because each device provides specific functions not available from the others.
With consumers moving on from the Web to a mobile, wireless environment, applications such as messaging, ringtones, graphics, and games, promise to dominate the mobile market. North American consumers that are accustomed to inexpensive and simple sources of personalized entertainment and informational services through the wired Internet are not likely to settle for anything less in the wireless space.
"Wireless carriers have realized that consumers value relevant forms of entertainment and/or informational services in the mobile environment," observes Longfield. "This Web-to-wireless transformation is driving the static directions model toward the mobile world, where the service can offer increased personalization and relevance."
Posted to the site on 23rd June 2005
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