3G growth to sustain handsets through recession

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3G growth to sustain handsets through recession

By CAROLINE GABRIEL

Published: 8 January, 2009

READ MORE: Handset

The latest in a series of depressing sets of figures for the handset market show the sector going into sharp decline in the fourth quarter of 2008, but the authors, ABI Research, see some light on the 2009 horizon, especially in W-CDMA.

The company believes that, when the figures for Q4 are fully calculated, a sharp decline in October and November will have caused a year-on-year drop in shipments of around 5%, notwithstanding the slight bounce effect of the holiday purchasing season in December.

The year ahead will be tough, but there will be considerable resilience in smartphones and across the W-CDMA and CDMA2000 categories, which are likely to represent half of all cellphone shipments by the end of 2009, compared to 39% now. Analyst Jake Saunders said:

"Much of the brunt of the economic downturn will be experienced in the 2G categories. W-CDMA handset shipments are projected to grow from 258m in 2008 to 725m in 2009. By 2013, more than 67% of all handsets shipped will be 3G or 3G+ capable."

The high end of this category, smartphones, accounted for 14% of the 2008 market, ABI estimates, and in 2009 should grow their share of a total sector that is likely to have been squeezed by 5-7%. By 2013, smartphones are expected to account for 31% of the market, though the definitions will have changed significantly by then (will an MID count as a smartphone, for instance?)

Cellular modems will also see strong growth in 2009, driven largely by USB dongles, which will account for 80% of volume. Overall shipments are expected to increase by more than 55% in the coming year as Asian vendors push down prices and operators come up with creative plans to lure new subscribers - such as daily plans or per-megabyte fees.