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Monday, June 10, 2002
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Replacement cellphone market likely to grow

THE future success of mobile phone makers will depend on their ability to sell "replacement phones" because 77 per cent of total global unit sales by 2005 will come from consumers intent on replacing older phones, said a study released last week.

Total handset unit sales are expected to grow to 455 million in 2005 from an estimated 427 million in 2002, according to the study, prepared by the Shosteck Group, a wireless consulting firm based in Wheaton, Maryland.

During the same period, replacement sales, or the percentage of phones sold to replace older phones, will grow to 77 per cent from 54 per cent of total units sold.

"Worldwide, annual subscriber increases peaked during 2000 and 2001 at between 230 to 250 million. In subsequent years they will decline toward 100 million," Herschel Shosteck, chairman of the Shosteck Group told Reuters.

 


"With this, replacement sales have become the major driver of the handset market."

To capture this market in an increasingly competitive environment, the study noted that major mobile phone makers are dividing into two camps.

Motorola Inc. , Sony-Ericsson and Siemens are trying to draw consumers through low-end phones, while Nokia and Samsung are attempting to capture the market with the strength of their brand and greater functionality, the study said.

"The validity of these strategies will determine which handset vendors dominate in 2005," said Jane Zweig, chief executive of the Shosteck Group.

As wireless operators switch to advanced wireless networks with high-speed Internet access, the difference in price between the old and new technologies will be key in the adoption rate of new mobile phones, the study said.

In other words, the price difference must be minimal to convince consumers to buy new phones that can take advantage of the next-generation networks.

Colour screens will be a driving factor in encouraging consumers to try the advanced data features, the Shosteck Group said.

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