HomeNewsFinancial downturn will have major impact on mobile device manufacturers, claims report

    Financial downturn will have major impact on mobile device manufacturers, claims report


    The financial downturn will see 1.04 billion fewer devices sold in the next five years than had previously been expected, according to Informa Telecoms & Media's latest report, 'The Financial Crisis: Analyzing the impact on global mobile markets'. The global economic downturn has led Informa to revise device-sales forecasts for the next five years down 14%, but growth is expected to pick up in 2010, albeit at a lower rate than previously expected.

    According to Informa, device-sales figures will once again hit 2008 levels in 2011, when year-on-year growth of 8% is expected. Sales of high-end devices are expected to grow faster than those of low-end devices after 2009, indicating a shift among users worldwide away from cheap devices to more feature-rich and expensive ones.

    Users will buy 6.39 billion devices between now and 2013, according to revised figures from Informa Telecoms & Media that take into account the global economic downturn.

    A forecast made last year, before the extent and severity of the economic downturn became apparent, stated that 7.43 billion devices would be sold to end-users in 2009-2013, meaning that the economic downturn has caused a 13.9% downward revision in Informa's forecasts.

    The revised figures forecast that users will buy 1.12 billion devices in 2009, compared with the previous forecast of 1.32 billion. Informa includes both handsets and dongles in its definition of devices.

    "Although growth is forecast to slow in 2009, it is set to pick up again in 2010, when users are expected to buy 1.17 billion devices, up 4.27% year-on-year," says Paul Lambert, senior research analyst at Informa Telecoms & Media.

    End-users will keep their devices for six to nine months longer than in the past as a result of the economic slowdown and that operators will move away from aggressive handset subsidies.

    Users are expected to be less inclined to spend disposable income on new devices, a factor that will prolong the handset replacement cycle. Each of these factors will have a negative impact on device sales in 2009.

    The mobile industry recorded a first in 2008: For the first time, the quarter with the fewest net subscriptions added was the fourth. Because the fourth is traditionally the quarter with the largest number of net additions, this could be a sign that the financial downturn is now affecting subscription growth.

    The number of net mobile subscriptions added worldwide in 4Q08 fell to just under 164 million, representing a 4.5% quarter-on-quarter decline and a fall of about 17% year-on-year. By the end of 2008, there were 3.97 billion active mobile subscriptions globally, accounting for a 59% penetration rate.
    The region that suffered the most in 4Q08 was Asia Pacific, where there were 68.4 million net additions, down from 87 million in 3Q08 and 87.6 million in 4Q07. The 4Q08 figure represented the region's lowest individual quarterly growth for seven quarters.

    There are also clear signs of a slowdown in growth, when comparing net additions for 4Q07 and 4Q08 in Europe, North America and Latin America. However, there is still resilient growth in the Middle East and Africa. In Africa, penetration is still under 38%, and across sub-Saharan Africa the figure is much lower.