Wireless Phones To Draw From Replacement Well In '03
By Joseph Palenchar -- TWICE, 12/23/2002
LAS VEGAS — New wireless phones that take advantage of carriers' latest 2G, 2.5G, and 3G data services will go on display at next month's CES, where at least three handset suppliers will show their first digital wireless phones with color LCD displays. Two of the models will also be the companies' first with a built-in digital camera.
The introductions will occur as carriers ramp up their promotion of new data services to reduce churn, increase airtime use, and reach new demographic niches. The new phones and services, combined with an aging handset base, will help drive up handset sellthrough in 2003, analysts said.
Conventioneers will also find a greater selection of CDMA 1X phones equipped with BREW technology to download games, entertainment applications, and business-oriented applications.
Some of the products will be displayed off-site at private meetings.
Color-screen phones have already proven popular, with NPD TechWorld estimating that 8 percent of phones sold to consumers in October were color-screen phones. Such phones will contribute to rising replacement sales, as will the rising age of the installed handset base, said Yankee Group analyst John Jackson.
Jackson expects U.S. sellthrough to rise in 2003 by about 31 percent to 66-67 million from 2002's estimated 51 million, largely because replacement sales will offset the rapid decline in the number of net new subscribers. The number of replacement handsets sold, he said, will rise to 52 million in 2003, up from 2002's estimated 37 million.
Total U.S. handset sellthrough in 2002 fell to 51 million from 52 million, he said.
"There's an awful lot of analog and TDMA handsets out there [in need of replacement]," Jackson noted. As of mid-2002, CTIA statistics show, about 15 million people were still using analog handsets.
On top of that, a total of 28 percent of the nation's more than 130 million subscribers are using handsets that are more than two years old, Jackson said. With the average handset's useful life running at about 45 to 50 months, about 41 million handsets will be replaced in the next 18 to 20 months, he said.
The FCC's numbers-portability mandate will also boost replacement sales when it goes into effect in November 2003, he said. In the November 2003-January 2004 period, monthly churn will rise from about 2.5-2.8 percent to 6 percent as consumers take advantage of the ability to change networks and keep their existing phone number, he projected.
The FCC has postponed the numbers-portability mandate but isn't likely to do so again, he said.
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