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Apr. 17, 2009

While new mobile phone subscriptions are expected to continue to rise, overall handset sales could drop by as much as twenty percent globally this year, according to Allen Nogee, a wireless industry analyst at research firm In-Stat.

In fact, Nokia yesterday reported a big 90 percent drop in overall mobile handset sales in the first quarter.

Nogee added that he thinks Nokia’s disappointing results have a lot to do with its heavy presence in China. “Nokia doesn’t have a good presence in the U.S. but they have a huge presence in China, which has been heavily hit by the global recession,” he said.

Nogee cited mobile consumers looking to avoid contracts during these uncertain times as one reason for the drop in mobile handset shipments.

“If you look at what makes up the total phone sales, there’s about 30 percent of these that are new customers, but then there’s the other 70 percent who are people replacing their phones. Right now, people don’t want to commit to a new 2 or 3-year contract and they’re more likely to stick with what they’ve got,” he said.

The report also shows a noticeable slowdown in subscription growth. After experiencing a 19.3 percent growth in subscriptions last year, subscription growth will fall by more than half, to 8.9 percent this year and by 6.3 percent the year after, the report states.

A report from ABI Research released in late March forecasted a continued decline in handset shipments for this year, with a best-case scenario of flat growth in 2010.

The In-Stat report concludes that it will take until 2011 for shipments to regain any kind of measurable growth, forecasting a 9.6 percent increase in handset shipments by that time.

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Source: In-Stat.