Cellphone Batteries Face 'Juice' Demand, Study Finds

Scottsdale, Ariz.— The cellular phone battery market will need to evolve dramatically in the coming months in response to new phone color LCD displays, GPS, faster processors and high-speed Internet access, according to market research firm In-Stat/MDR.

Through 2006, lithium-ion polymer batteries are expected to have the greatest growth rate, although lithium-ion unit sales still are anticipated to exceed those of lithium-ion polymer by almost a factor of three to one in 2006, said In-Stat.

"With service providers requiring extra features in order to add revenue to the bottom lines, and, consumers becoming increasingly accustomed to long handset battery life, battery storage capacities are having a tough time keeping pace," said Allen Nogee, a senior analyst with In-Stat/MDR.

"But consumers shouldn't give up hope of ever seeing long-lasting wireless devices in the future. Through the years, component manufacturers have done an excellent job of keeping power consumption of wireless devices in check, and ever shrinking process technologies will continue to do this in the future," said Nogee.

In its report, called "Handset Juice, Will the Battery Keep Up With the Need?," In-Stat includes a background on battery and fuel cell technology, along with a forecast of handset battery units by battery technology, average selling prices by technology and revenue by technology.

Key aspects of the report show that revenue from replacement/second battery purchases has been steadily decreasing over the years, and this trend is forecast to continue through 2006, with some slight reversals toward 2005.

Overall, due to longer cellphone battery life, consumers have been less likely to purchase a second battery, and due to a drop in handset prices, it's often cheaper to buy a new cellphone than it is a replacement battery, said In-Stat. For these reasons, the report said replacement/second batteries represent less than 8 percent of the total, down from almost 20 percent a few years ago.

Although battery units sold in the next few years are expected to increase modestly, revenue gained from these battery sales is expected to remain relatively flat from 2002 through 2006. Even with the number of batteries increasing, average selling price is forecast to decrease by an equal amount, due, in large part, to most battery manufacturing moving to China.

Fuel cells are not expected to have a large share of the cellular handset market by 2006, with their first limited use expected to start in 2004, said In-Stat. Even with more overall consumption of fuel cells by 2006, inconvenience and higher cost is expected to be a deterrent in their widespread adoption, concluded the study.