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01/23/2007

EMEA mobile phone market to grow 12% in 2007 to reach 400 million units, says IDC

LONDON – JANUARY 23, 2007 – According to the latest forecast from IDC, shipments of mobile phones in EMEA, encompassing both traditional mobile phones and converged devices, are expected to reach over 400 million units in 2007, representing year-on-year growth of 12% and constituting over a third of global mobile phone shipments. IDC predicts shipments in excess of 475 million by 2010 in EMEA as CEMA grows to generate almost 50% of the EMEA handset market.

In Western Europe, IDC forecasts full year growth of 11% for 2006 ahead of finalization of 4Q data at the end of January. Looking forward to 2007, IDC anticipates a slight slowdown in growth, indicative of lengthening postpay contract terms in tandem with further saturation of subscriber growth. From a technology and product perspective, however, the market will see further steps along the path of convergence, which will be a key driver of volumes in high-end segments.

"2007 promises to be an exciting year with the widespread integration of technologies such as HSDPA, WiFi, mobile TV, GPS, and high-capacity storage in conjunction with further acceleration in the extension of Web services to the mobile domain, all of which will present operators with the opportunity and challenge of driving new service and data revenues," said Geoff Blaber, senior research analyst, European Mobile Devices. "Apple's entry into the mobile phone market will further invigorate the industry in 2007 by redefining user expectations in the context of user experience and as a consequence command vendors to reconsider the conservative approaches to UI design adopted to date."

Also central to total market growth will be converged devices, as buoyant demand and double-digit growth increase the share of devices using an open OS to over 10% of the total Western European mobile phone market in 2007, and 30% by 2010, thus steadily cannibalizing the high-end feature phone segment in the next four years.

However, IDC warns that despite clear growth opportunities, overall market conditions in Western Europe will become increasingly challenging in 2007.

"ASP declines in 2007 will be an inevitable consequence of operator scrutiny of portfolio costs and a desire to reduce platform fragmentation and the unnecessary reciprocation of devices with consistent form factor and specification sets across the portfolio," said Andrew Brown, program manager, European Mobile Devices and Computing. "IDC predicts further industry consolidation as vendors outside the top 4 or 5 struggle to compete in a climate that is becoming increasingly sensitive to cost."

In a CEMA context, IDC expects strong demand to continue. "The driver of growth in CEMA is no longer the Russian market but other parts of the CIS and in particular the poorer countries of the Middle East and Africa, such as Nigeria, which are showing robust year-on-year growth," said Simon Baker, program manager, Mobile Devices, CEMA. "The mobile services business is consolidating rapidly across the region, with heavy inflows of investment from largely Middle Eastern sources expanding network reach and making mobile services more affordable for lower-income Africans."

In CEMA, handsets are predominantly sold for full price independent of operators, and while the region varies significantly, entry-level handsets are the key segment. "A handset needs to be perceived as a durable, quality product, but beyond that it is the price point around which the market revolves," said Baker. "A $5 reduction in retail price, pushing more popular basic models below the $40 threshold, could produce a substantial boost to overall sales in the poorer countries of the Middle East and Africa." In these countries in 2007 there will continue to be strong price pressure and growth will predominantly be in the entry-level segment.

Handsets are a prominent prestige purchase and demand for top-of-the-range models is also strong in MEA, but sales tend to be focused on richer Middle Eastern countries, notably Saudi Arabia, where the handset market is reaching saturation. Overall within CEMA IDC is forecasting a rise in shipments of converged devices to 18.2 million in 2007, up more than a quarter on the year before.

IDC European Mobile Devices Services

Detailed forecasts and analysis are available and can be found in IDC's latest Western European Mobile Phone Forecast and Analysis, 2006-2010 study (Doc #JS06N, December 2006). Additional analysis of the camera phone market is also available in the Western European Camera Phone Forecast and Analysis, 2005-2010 study (Doc #JS04N, June 2006). For more information, or to purchase these studies, please contact Andrew Brown (+44 208 8987 7209), Geoff Blaber (+44 208 8987 7193), or your IDC sales representative on +44 (0)208 8987 7100. Alternatively, please visit www.idc.com .

Detailed quarterly analysis is available through IDC's EMEA Mobile Device Trackers covering handhelds, converged devices, and traditional mobile phones for the EMEA region (Western Europe, CEE, MEA) and by country and across a wide range of dimensions including air interface, operating system, camera resolution, etc. For more information, please contact Andrew Brown (+44 208 8987 7209), Jean Philippe Bouchard (+33 15 539 6114), or your IDC sales representative.

IDC CEMA also produces regular quarterly trackers on the mobile phone markets in Russia, Ukraine, and Nigeria. For more information, please contact Simon Baker on +7 495 739 2250.

IDC organizes a worldwide road show looking at the changes in mobile technology and the implications for enterprises. For information about how your journalists and readers can attend these events free of charge please visit www.idc.com/events .

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. Over 850 IDC analysts in 50 countries provide global, regional, and local expertise on technology and industry opportunities and trends. For more than 42 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company.

You can learn more about IDC by visiting www.idc.com .

All product and company names may be trademarks or registered trademarks of their respective holders.

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