Entry-level handset markets to enjoy 24% annual growth through 2014, says ABI Research
Low cost and ultra-low cost (ULCH) handsets will see a CAGR of 24% over the next five years, according to ABI Research.
The world's largest underserved markets for mobile communications are in developing nations and regions. Asia, Africa and Latin America all have vast potential, but formidable barriers stand in the way. "The price of a ULCH handset is widely seen as critical to the tipping point for mass adoption in emerging markets," said industry analyst Michael Morgan. Handsets are rarely subsidized in emerging markets. The GSM Association has pegged the maximum desirable ULCH handset price at US$25 through 2010 and at US$20 for 2011-2012. "I believe in 2013-2014 the top price for a ULCH phone will be no more than US$15, which is feasible because some handset models are hitting that price today." added Morgan
Other inducements fostering uptake of mobile services in emerging markets include value-added data services using locally relevant content and more enlightened attitudes among government regulators towards reducing taxes and tariffs on handsets and services.
However, emerging markets do present significant challenges. For handset vendors, the low prices mean margins so thin that profitability demands major economies of scale. Vendors must also control a wide IP portfolio and manufacture locally to control royalty, import and labor costs. ABI Research noted that Nokia is the out-and-out market leader on all these counts.
Morgan concluded, "Entry-level handsets must deliver high value to low-income emerging market consumers who want good quality at low cost."
The world's largest underserved markets for mobile communications are in developing nations and regions. Asia, Africa and Latin America all have vast potential, but formidable barriers stand in the way. "The price of a ULCH handset is widely seen as critical to the tipping point for mass adoption in emerging markets," said industry analyst Michael Morgan. Handsets are rarely subsidized in emerging markets. The GSM Association has pegged the maximum desirable ULCH handset price at US$25 through 2010 and at US$20 for 2011-2012. "I believe in 2013-2014 the top price for a ULCH phone will be no more than US$15, which is feasible because some handset models are hitting that price today." added Morgan
Other inducements fostering uptake of mobile services in emerging markets include value-added data services using locally relevant content and more enlightened attitudes among government regulators towards reducing taxes and tariffs on handsets and services.
However, emerging markets do present significant challenges. For handset vendors, the low prices mean margins so thin that profitability demands major economies of scale. Vendors must also control a wide IP portfolio and manufacture locally to control royalty, import and labor costs. ABI Research noted that Nokia is the out-and-out market leader on all these counts.
Morgan concluded, "Entry-level handsets must deliver high value to low-income emerging market consumers who want good quality at low cost."
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