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Recession Hits Cellphones Too

4/15/2009 12:55:00 PM Eastern

Scottsdale, Ariz. — The cellphone has held fast against the gravitational pull of recession, but handset shipments will start to fall this year, sinking 19 percent for North America and 20.5 percent world wide, said the research firm In-Stat.

Next year, North American shipments will drop another 9.5 percent, said the research firm.

“People that are unemployed are less likely to replace their cellphones, and businesses will not pay for cellphone subscriptions for employees they’ve let go,” said analyst Allen Nogee.

Even people who have not lost a job are more likely to ‘make do’ with their existing handset, he said.

About three-quarters of handset sales are replacements, and these are “particularly vulnerable to economic contraction,” Nogee said.

In-Stat predicted it will take until 2011 for shipments to regain healthy growth, expected to hit 9.6 percent worldwide at that time.

The cellphone market is also measured in subscriptions, which last year grew by a hefty 19.3 percent worldwide. Subscription growth this year will slow to 9 percent gains and 6 percent in 2010 worldwide, In-Stat said.