Mobile phone shipments keep growing on a fast pace

Framingham (MS) - Cellphone manufacturers are well on track to break the 1-billion barrier in unit sales this year. According to a report released by IDC, third quarter sales were up 21.0% year-over-year.

Q3 sales reached 254.9 million, up from 210.7 million last year and up 7.9% from 237.8 million in Q2 2006. "The strong growth in the third quarter was very comparable to the growth we saw in Q3 05, as the trend of vendors and carriers working to prep for the holiday season begins," said Ryan Reith, research analyst with IDC’s Worldwide Mobile Phone Tracker. "New models are appearing on shelves, carrier marketing campaigns are everywhere, and the buzz around stylish phones are driving consumer awareness towards new devices."

IDC said that the high shipment numbers leave the previous 2006 forecast intact, "with the aim to reach nearly a billion units shipped for the year." That estimate may be a bit conservative, if the industry can maintain its current pace. With 725.5 million phones sold in the first nine months of the year (more than the industry sold in all of 2004, which achieved sales of 707.3 million), cellphone manufacturers would need to sell about 275 million phones in Q4, to break the 1 billion barrier. Assumed that the industry will increase its sales by 20% in Q4 year over year, sales could reach 290 - 295 million units and bring the tally to 1.02 billion phones for 2006. Compared to 2006 sales of 825.5 million cellphones, this number would represent an annual revenue growth of about 23.5%.

IDC said that emerging markets have presented tremendous opportunity for vendors to provide users with their first handsets, and some users may already be looking to upgrade to another phone. Similarly, replacement handsets are a popular option for those in mature markets, especially as new features such as music have gained momentum.

With the holidays approaching, the market research firm believes that consumers shift their aspirations from slim handsets to mobile music. "Handsets that provide music functionality are now very visible in the industry. Mature markets are at a point where it is worthwhile for the carriers to launch these devices with strong marketing campaigns behind them, knowing that consumers are willing and ready to use their device as a music player as well as a phone," said Reith.