Mobile upgrades surge as penetration deepens

High rates of mobile handset penetration will result in global upgrade purchases outstripping first-time buys for the first time in 2007 according to a report by US-based industry analyst iSuppli.

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By  Administrator Published  April 1, 2007

High rates of mobile handset penetration will result in global upgrade purchases outstripping first-time buys for the first time in 2007 according to a report by US-based industry analyst iSuppli.

The report predicted that first-time handset sales would drop by a massive 33.2% year-on-year to 342 million in 2007 and forecast a further drop to 201 million units by 2010. These figures represent a compound annual growth rate (CAGR) of -15% from 453 million units in 2005 when first time handset sales experienced a 38.1% rise.

Meanwhile, upgrade purchases are set to reach 712 million in 2007 with an impressive 56.7% year-on-year increase in unit sales for the year. In contrast to first time purchases, upgrade sales will steadily rise within the next three years to more than 1 billion units.

The 2007 results would represent an unprecedented state of affairs in the industry, with upgrade purchases more than doubling first-time acquisitions with upgrade sales enjoying a CAGR of 22.6% over the next three years.

The slowdown in first-time handset sales denotes a major deceleration in global mobile phone subscriber growth with year-on-year growth rates dropping to 12.8%, in 2007, down from 25% in the three years previously, and eventually falling to 5.7% in 2010.

"However, this doesn't mean that subscriber growth will stop altogether," said Tina Teng, lead analyst wireless communications for iSuppli Corp.

Global mobile phone subscribers will reach 3.7 billion by 2010, rising at a CAGR of 8.7% from 2.7 billion in 2006. This growth will be driven primarily by emerging markets which will add about 900 million subscribers between 2007 and 2010, the report claimed.

The report also forecast that vendors and OEMs with high end product portfolios would be the chief beneficiaries of the trend if they can successfully pitch their devices' enhanced capabilities to the market.

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