Cellphone sales seen at over 1 billion a year by 2009

AMSTERDAM - Mobile phone sales will exceed one billion handsets a year by 2009 as they become the most common consumer electronics device with 2.6 billion people using one by then, according to a survey published today.

Around 1.04 billion cell phones will be sold in 2009, up from an upwardly revised estimate of 779 million this year and 674 million handsets in 2004, research group Gartner said.

"The mobile phone is the most prolific consumer device on the planet," said Gartner analyst Ben Wood. By comparison, every year around 200 million PCs and 200 million TVs are being sold.

The Asia Pacific region is seen as becoming even more important, with one out of every three mobile phones sold in the area in 2009, up from one in three this year.

"China and India alone will account for nearly 200 million units in 2007, with the Indian market surpassing China in 2009 to reach 139 million units," Asia Pacific analyst Ann Liang.

Vendors including Finland's Nokia, U.S.-based Motorola and Samsung Electronics from South Korea will generate combined revenues of US$1.7 billion (NZ$2.5bn) in 2009.

The average price per mobile phone will slip to US$161 in 2009 from US$174 in 2004, the study said, even though the handsets will have more memory and better screens and cameras than current models.

"Profit margins are going to get squeezed dramatically both in mature and emerging markets. It will drive many of the smaller players out of business," Wood said.

The price differences will be huge, with basic handsets for emerging markets selling for US$20 apiece, while smartphones with computer-like functions retailing for hundreds of dollars.

Smartphones, currently a luxury segment, will make up just over one fifth of all phone sales by 2008.

BIG SIX GAIN GROUND

The big six vendors, which also include LG Electronics, Sony Ericsson and BenQ/Siemens, will benefit from scale advantages which enable them to buy components cheaply. They are also able to finance and deliver big orders to mobile telecoms operators.

"Hence this year we've seen Siemens bail out, Alcatel exit in a joint venture, Matsushita's Panasonic pull out of North America, Mitsubishi pull out of Western Europe, Sendo fail, Lite-On exit the original design manufacturing (ODM) business, Panda and Soutec close their doors in China," Wood said.

The top six vendors already produce four out of every five mobile phones in the world, while another 50 manufacturers fight for the remaining sales.

Gartner raised its 2005 forecast by 29 million phones to 779 million after a much stronger than expected start to the year, mainly driven by demand in developing markets but also by consumers replacing their old handset with a more advanced model with a big colour display, camera and a fast 3G connection for quick downloads of pictures, video and music.

- REUTERS