visiongain intelligence: Contract manufacturers will put added pressure on handset makers

According to new research from visiongain intelligence, "the increasing demand of operators to customise and brand their own handsets will benefit contract manufacturers in the mobile handset industry." Visiongain estimates that "outsourced handsets will account for 36% of total shipments in 2006, a figure that will rise to 47% of all mobile devices by 2009."

visiongain states that "Flextronics, the leading contract manufacturer, produced 47 million handsets in 2005, putting it close behind the world’s fourth largest handset maker, LG, which made 53 million phones that year, and ahead of Sony Ericsson."

visiongain analyst and Adam Walkden said, "Own-brand handsets are one way for operators to increase data usage, and the trend towards greater customisation will have an impact upon the manufacturing side of the industry. OEMs need to re-assess their relationships with operators and become more accommodating in terms of cross branding and customisation. Only by doing so can they compete with the ODMs and EMS providers who are willing to work closely to meet all the operators’ needs.”

visiongain pointed out that another opportunity area for ODMs and EMS providers was "the burgeoning low-cost handset market," because "ultra low-cost and low cost handsets can be made more cheaply by contract manufacturing, leading more OEMs to outsource the production of such handsets as emerging market growth continues."

Walkden added, "We are also seeing moves towards increasing handset production in India as a result of more favourable government initiatives. Once the dark horse of handset manufacturing, India will experience a dramatic increase in the number of handsets shipped from the region."