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3G handsets to drive European mobile market in 2005
March 13, 2005
IDC's market forecast for Western European mobile phone shipments in 2005 predicts steady market growth of 12% and significant evolution in market structure, with the converged device segment and WCDMA handsets due to continue the explosive growth witnessed in 2004.
Increased consumer spending directed towards handset upgrades and new 3G services over the Christmas period in the final quarter of 2004 pushed total year shipments towards 144 million units, representing year-on-year market growth of 19%. While converged devices witnessed growth of 40% in 2004 compared to 18% for standard mobile phones, IDC indicates that devices featuring evolved operating systems still only account for approximately 4% of the total mobile phone market.
However, IDC points to announcements from Symbian, Series 60, Windows Mobile, and PalmSource presenting intentions to penetrate broader market segments and the success of devices such as the Nokia 6630 and Orange SPV C500 in consumer segments as drivers of converged device growth in 2005. Consequently, IDC forecasts growth approaching 70% for such devices in 2005, increasing smart phones' total proportion of the market beyond 6%.
"While in 2004 consumers were predominantly motivated by device form factor and hardware, as consumption of media content increases in 2005, users will increasingly demand a higher specification OS and UI with superior application capability in order to effectively download, manage, and manipulate a range of media content. As long as feature phones continue to neglect the importance of software integration, this represents a significant opportunity for smart phones," said Geoff Blaber, research analyst for European Mobile Devices at IDC.
Coordination with the Christmas period for 3G launches from operators Vodafone and Orange increased momentum with regards to contract and handset renewals/upgrades, as the new services served to reinvigorate the consumer market. 3G service launches and the subsequent increase in 3G handset development saw explosive year-on-year growth of almost 850% in 4Q, driving the proportion of WCDMA handsets to 6% in 2004 compared to 1% in 2003.
IDC forecasts WCDMA handsets to increase to around 13% of total mobile phone shipments in 2005, particularly in light of service launches from T-Mobile and O2 in 1Q and new 3G handsets such as the 6680 from Nokia and Sony Ericsson's K600i. However, GPRS is forecast to remain the dominant standard for the total mobile phone market, in contrast to GSM, which is expected to continue its decline in competition with a growing selection of low-cost GPRS-based, and increasingly EDGE-based, handsets. IDC also notes that while 4Q witnessed a significant increase in the number of available 3G devices, the Series 60 Nokia 6630 was the only smart phone-level device in operators' lineups.
"The wide-scale absence of converged devices featuring WCDMA capability illustrates that 3G is yet to be considered compelling or even necessary for business/enterprise-level applications. To date, there exist more smart phones featuring WiFi than WCDMA, and we expect 3G handset development in 2005 to remain led by consumer-orientated devices rather than enterprise-level smart phones," said Andrew Brown, program manager for European Mobile Devices at IDC.
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