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India over China in Mobiles

http://www.redherring.com/Article.aspx?a=12824&hed=India+over+China+in+Mobiles+

India will overtake China in mobile phone sales by 2009, predicts a new Gartner report.
July 20, 2005

India will overtake China in the volume of annual sales of mobile phones by 2009, according to a report released Wednesday by the technology research firm Gartner.



In the report, Gartner significantly increased its cell phone sales forecast for 2005, predicting that global mobile phone sales will reach 779 million units in 2005, a 16 percent increase over 2004.



Based on current growth rates, Gartner is now predicting that the milestone of 1 billion mobile phones sold per year will be reached by 2009.



Gartner also predicts that 100 million 3G (third generation) phones will be sold in 2006, and more than 200 million smartphones in 2008.



Mobile phone sales continue to grow across the world, but in mature markets such as North America and Europe, most of the sales come from replacement phones. In emerging markets such as India, however, new customers are still signing up for their first phones.


‘The price of the silicon will come down.’

-Carolina Milanesi,

Gartner








Asia/Pacific Growth

One in every four mobile phones sold this year will come from the Asia/Pacific region. By 2009, this rate will increase to one in three. Gartner predicts that China and India alone will account for almost 200 million phone sales in 2007. In 2009, however, India will surpass China to reach 139 million units.



“It’s not that one is doing better than another,” explained Carolina Milanesi, principal analyst with Gartner. “The market is at a different stage.”



She noted that while China is still a growing market, the Indian market has been targeted both by operators and phone manufacturers as one of the key markets for the sub-$40 phone and there is a great deal of growth coming from that initiative.



In the United States, in contrast, Gartner predicts that the average wholesale price of a mobile phone will decline from $174 in 2004 to $161 in 2009.



“The Chinese market is very complex,” said Ms. Milanesi. “In general, the trend you see is a great diversity in the markets in terms of what types of phones are sold. The distribution channel is very complex as well. There are different tiers of distribution, and people lose track in the countryside.”



She predicts that the Chinese mobile market will continue to grow, but the growth won’t be as dramatic as in past years.



3G Development

Meantime, 3G mobile phone technology is taking off, with more high-speed wireless networks being deployed around the world. The price of the chips is also coming down to the point where phone manufacturers are able to produce cell phones that include 3G chipsets and sell them in areas where 3G networks have not even been built yet.



“You will see sales in countries in Africa and Eastern Europe where there is no 3G network, but the phones will be appealing to users on a 2.5G network,” said Ms. Milanesi. “The price of the silicon will come down and WCDMA [wideband code division multiple access] and Edge will be in a lot of phones.”



As long as the older type of GSM (global system for mobile communications) network is in place, phones with 2.5G and 3G technology can still function on the older networks.



“If you compare the sales of WCDMA phones to the subscriber rate, it’s not one to one,” said Ms. Milanesi. “You wind up with many more WCDMA phones that are not sold to subscribers.”