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The economic recovery and new handsets that drive up replacement sales will boost unit sales of wireless phones to North American users by 15 percent in 2002 and 18 percent in 2003, according to a Strategy Analytics study.
Sales to end users will hit 90 million in 2002 and 106 million in 2003, the research company said.
The growth rates differ little from the 16-17 percent rate experienced in 2001, but they are down significantly from the boom years of 1999 and 2000, the company said.
In 2002, replacement sales will outpace sales to first-time buyers for the first time, the company noted (see table). Replacement sales will hit 52 percent of total end-user sales in 2002 and will rise every year through 2007, when the percentage will hit 64 percent.
"A slow but steady economic recovery, combined with the operators' ability to offer handsets with compelling new features — like color screens and Java/BREW — will drive sales," said analyst Chris Ambrosio. "Replacement sales will be the key to generating more than half of new handset sales through 2007."
Despite growing sales of highly featured phones, average wholesale prices will continue falling moderately every year through 2007, the company said. Average wholesale prices fell to $130 in 2001 from $147 in 2000. In 2002, it will hit an average $123 before falling to $90 in 2007, it said.
The company also projects that in 2002:
CDMA handset sales will grow 19 percent in units as Sprint and Verizon "capitalize on the efficiencies of Asian vendors … to drive 1XRTT handset upgrades," Ambrosio said. CDMA 1X handsets will account for 36 percent of CDMA handset sales in 2002.
GSM handset sales will grow 174 percent in units "as AT&T Wireless and Cingular Wireless migrate a critical mass of TDMA users to GSM/GPRS handsets," he said. GPRS handsets will capture 50 percent of GSM handset sales in 2002.
TDMA, which was the first digital format adopted by the U.S. industry, will falter, with handset sales falling to 8 percent of annual shipments in 2003.