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Competitive pressures will rise at this week's CTIA Wireless convention as market maturity drives down U.S. handset sell-through and carriers accelerate efforts to boost revenues during the worst recession in the industry's 26-year history.
Handset vendors will do their part to encourage replacement sales by launching new 3G-equipped touch-screen phones, smartphones and QWERTY-keyboard phones, all of which support carriers in their efforts to encourage revenue-boosting mobile-data usage. (See story on p. 32.) Vendors and carriers will also focus on embedding wireless in mobile devices such as netbooks, laptops, ultramobile PCs (UMPCs), and consumer electronics products, including digital cameras, personal navigation devices (PNDs), and portable media players (PMPs). (See TWICE.com during the week for show updates.)
“Carriers are looking at devices outside traditional handsets [to boost revenues],” said Strategy Analytics analyst Bonny Joy. “That is the future,” he said of CE devices that will incorporate 3G and 4G (Long Term Evolution and Mobile WiMAX) technologies.
The road to future growth, however, is filled with ruts. With U.S. cellular subscriptions having reached the equivalent of 84 percent of the entire U.S. population in mid-2008, CTIA and Census Bureau statistics show, net-new subscriber growth keeps on falling. Unit and dollar handset sell-through, excluding enterprise purchases, fell 15 percent and 5 percent, respectively, in the U.S. in 2008 following 2007's 2 percent unit gain and 27 percent dollar gain, NPD found in its consumer surveys (see p. 36.)
Market researcher IDC estimated factory-level sales of handsets in the U.S. fell 4.7 percent in 2008 and will fall 14.8 percent this year before picking up again in 2010, when IDC expects sales to grow 6.1 percent. Those figures reflect devices destined for purchase by enterprises and consumers.
Reduced consumer interest in buying a new phone reflects reduced interest in paying for extra services during tough economic times. A March survey of adult consumers by the New Millennium Research Council, a Washington-based research group, found that 39 percent of consumers with a contract-based cellphone, or 60.3 million people, are likely to cut back cellphone service if the economy gets worse over the following six months.
Among contract-phone users who subscribe to extra non-voice services such as texting or Internet access, the survey found that 8 percent would very likely cut some extras if the economy gets worse in the next six months, and 21 percent said they were somewhat likely to do so.
The council, which focuses on telecommunications and technology research, also concluded that 19 percent of adults who don't own a cellphone had disconnected service within the past six months because of actual job loss, fear of job loss, the recession or other related financial concerns. That percentage represents about 8.74 million consumers.
The CTIA show's attendance and exhibitor counts will reflect such numbers. Show management expects the number of attendees and exhibitors to drop from last year's 40,000 attendees and 1,200 booths, but it expects the people who show up to be better qualified. “We've been down this road before with the economy,” said show director Robert Mesirow. “You lose a lot of tire kickers and get a real concentration of serious attendees.” In the current environment, he added, attendees “have time to look for acquisitions and get more innovative themselves.” Innovations include advances in enterprise applications and vertical markets, he said.
For consumer users, some of the innovations here at the show, said Strategy Analytic's Joy, could include firmer plans for deploying 4G LTE and Mobile WiMAX networks, packaging wireless-embedded cameras and netbooks with new types of rate plans, and more smartphones, whose unit sales have risen in the U.S. despite declining handset sales overall.
U.S. smartphone sales by vendors grew 68.2 percent in 2008 and will rise 7.9 percent in 2009, then surge again at a 28.4 percent rate in 2010, according to IDC forecasts.
Smartphones and touch-screen-equipped phones will likely dominate show introductions. They'll include Windows Mobile 6.1 smartphones and at least one Windows Mobile 6.5 model, a hybrid cellphone/satellite phone. More Android-based phones are expected in the second half to join HTC's lone model in the U.S., but it wasn't certain at press time whether they would be introduced at the show.
Also at the show, startup prepaid carrier Zer01 will announce a commercial launch date for its $69.99/month unlimited mobile VoIP and data service, which will be sold through multiple distribution channels, including on-line and brick-and-mortar retailers.
The $69.99/month plan includes unlimited calling throughout the U.S. For another $10/month, consumers can get unlimited international calling to 40 countries. There are no additional taxes or fees except for a $30 activation charge.
The service will bypass carriers' circuit-switched channels, sending voice as VoIP-based packets over carriers' packet-based GPRS, EDGE, or HSDPA data channels to a virtual private network (VPN) that in turn accesses the public Internet.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.