Global Mobile Phone Sales to Grow 11% in 2008

Worldwide sales of mobile phones will reach 1.28 billion units in 2008 - up from 1.15 billion units in 2007 - an 11 percent increase from last year, according to Gartner, Inc - (via MarketingCharts).

While the mobile phone market is poised for double-digit growth in 2008 and 2009 (with sales expected to grow 10.3 percent), the industry faces challenges in some regions, which are projected to decline in 2008.

Mobile phone sales growth will increasingly rely on emerging markets as mature regions - such as Western Europe, Japan and North America - reach saturation, Gartner said. (View chart of 2008 mobile phone sales forecast by region.)

• In Asia/Pacific, mobile phone sales are forecast to reach 472.5 million units in 2008, a 17.9 percent increase from 2007.
• Mobile phone sales in Western Europe are projected to reach 188 million units, a 1.5 percent decline from last year.
• In North America, sales are expected to total 185.7 million in 2008, a 5.3 percent increase from 2007.
• Mobile phone sales in Japan are estimated to reach 47.7 million units, a 9.1 percent decrease from 2007.

“With a more mature market, mobile operators are seeing their service revenue come under pressure and, driven by lower flat-rate tariffs, demand for data services is starting to pick up, increasing demand for network investment,” said Carolina Milanesi, research director for mobile devices at Gartner. “Cost control and putting pressure on supplier pricing are the business norm of operators. Hence, mobile device vendors are experiencing increased pressure on device pricing.”

In Q1, worldwide mobile phone sales hit 294.3 million, and sales in Q2 will have reached 300-305 million units, Gartner predicted.

“We expect sales in the third quarter to be more than the second quarter results, but only moderately as both Motorola and LG issued warnings for a sequential drop in sales, as well as an economic environment that remains challenging,” said Milanesi. “All the hopes for mobile phone manufacturers for the overall year-end growth results rest on the final quarter of the year when most new products will be introduced to the market and the normal seasonality will help boost sales.”

Five Trends in Mobile Devices

Gartner has identified five key trends it says will affect the mobile device market through 2009:

1. Established Vendors Consolidate and New Players Join the Fray: New device vendors, such as Apple and Garmin, want to differentiate themselves, while big-name vendors, such as Motorola, face pressure as market shares decline and design innovation becomes increasingly challenging.
2. Device Vendors Build Out Ecosystems: Pressure from operators to lower the price of devices will drive some established players to seek out new sources of revenue from content and services sold to end users. This trend is epitomised by Nokia with Ovi, Sony Ericsson with PlayNow and Apple with its iTunes store. This new market will bring changes in relationships between vendors, operators and content providers.
3. Device Makers Remove Complexity for Users: Increasing device functionality and a need for differentiation will drive demand to simplify the user interface (UI) and service experience. As a consequence, mobile device vendors will need to build up their UI competencies while retaining familiarity and considering how users can move horizontally across their devices’ applications, rather than just vertically within them.
4. Mobile Devices Become Lifestyle Statements: Style will play more of a role across the range of devices, driven not only by fashion trends but also by consumers’ desires to reinforce lifestyle choices. Vendors need to have established platforms on which small changes to casings and colors can be made without affecting costs. They will also need to consider partnering with non-mobile companies and brands - such as consumer electronics, fashion or sports companies - to increase the lifestyle appeal and consumer reach of their products.
5. High-End Device Platforms Become “Field-Refreshable”: As cellular technologies become part of increasingly expensive consumer devices, vendors must manage ongoing support, upgrades and enhancement of drives. Because many users will hold onto high-end devices longer, these platforms will need more life cycle management in the form of upgrades and enhancements. Some vendors are implementing these “field refreshes” that can be made to support new digital rights management (DRM) requirements, download bug fixes, or download new applications, wallpapers or skins to keep devices up-to-date.