Thursday, January 12, 2006

Falling revenue for cell phone makers?

CNET reports that according to iSuppli, "Cell phone makers will have to drop prices even further in coming years as the market for new handsets in developed nations begins to dry up."

Scott Smyser at iSuppli noted that with "saturation so high in developed nations, there isn't enough consumer need to drive market growth." Handset manufactures will have to attract customers in less-developed nations, such as China and India, by offering "ultra-low-cost mobile phones."

Smyser said, "Service providers are pushing to get the price below $30." iSuppli predicted that the average wholesale price of a mobile phone "will slip to $129 in 2006, a 9 percent drop from $142 in 2005." Annual worldwide revenue from production of mobile phones "will drop to $109.7 billion in 2006, down 4.7 percent from this year's record high of $115.1 billion."

Smyser forecasted that by 2009 "consumers will opt for more sophisticated and expensive phones that can play video, music and snap pictures. These third-generation phones will make up 40 percent of the market by then."