Active handset market to grow to $100 bn by 2006

CHICAGO: The global market for new wireless telephones put into use will grow

by two-thirds through 2006, according to a study released on Wednesday.

Consumers outside the United States can buy cell phones over the counter, so

high tech research firm In-Stat/MDR prefers to track when a customer actually

activates service with a phone as a more accurate gauge of demand.

While cell phone sales were plagued last year by overproduction, delays in

the arrival of products with the desired features and a faltering worldwide

economy, global revenues for handsets are expected to grow to more than $100

billion in 2006 from an expected $60.9 billion this year and $57.6 billion last

year, according to In-Stat.

"We can still look forward with a moderate amount of enthusiasm. Now

that prepaid subscribers are being de-emphasized in many regions, the percentage

of low-featured, low-margin, handsets are on the decline and prices are expected

to remain reasonably stable over the next five years," In-Stat analyst Ray

Jodoin said in a statement.

For handset sales to rebound, however, a number of conditions are necessary,

including reasonably priced and desirable content, decent-sized color displays,

intuitive operation on the phones, a multifunctional global positioning system

and multi-brand roaming capability.

While voice calls will continue to drive the worldwide market for the

foreseeable future, data can help boost handset sales, not to mention profit

margins and carriers' average revenue per users, Jodoin said. The key is whether

content and price are right, which they currently are not.

In the study, which explores the worldwide market for first generation, or

1G, 2G, 2.5G and 3G handsets, In-Stat also said the Americas will account for

the activation of slightly more than one quarter of the worldwide handset uptake

this year.

Latin America will take an increasingly larger role in handset activations,

as that region's share of the worldwide activation market climbs to 10.2 percent

in 2006 from an expected 6 percent this year, In-Stat said. In-Stat/MDR is part

of the Reed Electronics Group, a division of Reed Elsevier, a publisher and

information provider.

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