Friday, January 13, 2006

Report: Handset Revenue Expected to Drop This Year

TechNewsWorld covers the report from iSuppli on Wednesday that predicted revenues would fall for handset manufacturers. Roger Entner at Ovum disagreed with the iSuppli's conclusion. He agreed "handset prices will continue to drop as manufacturers try to appeal to developing markets," but thought "overall handset revenues will continue to grow along with the number of shipments."

Entner said, "I think shipments should go up again, and revenue should go up as well. The decline [in average selling price] should not be larger than the increase in the number of units."

Ira Brodsky at DataComm Research noted the "the rollout of 3G, which include more multimedia capabilities, will require more advanced and more expensive handsets," but he said, "the development of lower-cost handsets is prevalent in large markets such as China, India and Malaysia. Where that leaves us is uncertain. I don't know how it will balance out."

Yankee Group senior analyst John Jackson pointed out that "many manufacturers are looking to keep prices down to achieve higher sales volume." He agreed with iSuppli's conclusion and said, "What you'll see is margins will trump markets."