Dean Bubley: Handset volume forecasts - relevance and overenthusiasm?

Dean Bubley writes at the Disruptive Wireless blog about his thoughts on the whole handset market forecasting thing from both manufacturers and other analysts. Bubley was inspired to write after SonyEricsson predicted the handset market to be more than 900m shipping in 2006. Bubley provides his macro-scale thoughts on the underlying assumptions for these forecasts:

The sources of handset shipments are:

• New subscribers
• Existing subscribers replacing their existing phone & ceasing to use the old one
• Existing subscribers getting a second phone/device to use in parallel with the old one

Bubley notes that "A lot of growth in recent years has been driven by the first two categories. New handset subscribers in places like China and India, or existing users upgrading to cameraphones. In addition, the emphasis on ultra-low cost handsets has also boosted the market. The third category has also evolved in saturated markets like Europe, where people often have multiple handsets or a BlackBerry or other second device." He then points out some new factors:

• maybe it's just my perception, but I reckon the media is a bit less concerned about new phones being cool, must-have, must-change-every-4-months, fashion accessories than a year ago, with the possible exception of pink phones
• an awful lot of supposedly fashion-conscious people seem to have bought Motorola RAZRs and are still using them after 12-18 months. I also still see a lot of Samsung D500's around. I guess they're happy with them.
• Operators seem to be moving to 18-month contracts, presumably in part so that they don't need to offer expensively-subsidised "free upgrades" after 12 months
• I can't believe anyone in the developing world who's scrimped together $30 to get a ULC handset & prepay card will be on the same replacement cycle as a fashionista in Tokyo or Helsinki. I reckon the more low-end devices there are, the slower the replacement rates will get.
• I reckon the 3rd category of multiple device ownership is probably underestimated. I see a number of operators looking at multiple-SIM tariffs, so people can have a sensible "work" phone and a cool "pub" phone without having to swap SIM cards over all the time.
  

Bubley concludes that he's "not sure what the continued engine of market growth is here. It's not 3G - the numbers are still too small. Replacement seems to be a but shaky - aside from "a better camera" there aren't many new must-haves. On the other hand, multiple device ownership looks rosier."