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Cellphone Shipments Poised For ’09 Fall: IDC

Framingham, Mass. — Factory-level unit sales of cellphones flattened out this year in the U.S. and will drop 8.7 percent in 2009, research company IDC said.

The company estimates factory-level unit sales in the U.S. declined 0.3 percent in 2008, marking the first drop since 2001, when sales fell about 5 percent. In 2009, the decline is forecast to accelerate to 8.7 percent, exceeding 2001’s percentage drop and causing U.S. sell-in to shrink more in absolute numbers than it did in 2001, said IDC analyst Ramon Llamas.

 “In 2009, we’ll feel the full effects of unemployment, less disposable income, and tighter budgets by consumers and enterprises,” he said. With less disposable income available and other expenses competing for attention, IDC said, “consumers may choose to hold on to their current devices rather than replace or upgrade them at the next possible opportunity, usually when a service contract expires. As long as the device functions properly, consumers may put off the replacement decision until more funds are available.”

Despite this year’s small decline in overall cellphone shipments, sales of smartphones grew almost 76 percent in 2008, IDC estimated. Next year, it’s a different story. Smartphone growth is forecast to drop dramatically in 2009 to 3.1 percent before resuming double-digit percentage growth in 2009, IDC said.

In 2008, lower prices on smartphones, or converged mobile devices, have helped make the devices “an attractive choice for consumers,” IDC said. “It was not long ago that these devices cost well above the $200 price point with a two-year contract. As prices have come down in recent quarters, these devices have become competitive alternatives to traditional mobile phones. Faced with the option of purchasing a converged mobile device at roughly the same price as a traditional mobile phone, consumers will be strongly tempted by the fully featured smartphone. Continued high demand and lower prices will keep this category growing, even as the overall market struggles.”

Llamas pointed out that carriers have boosted their subsidies on smartphones to entice consumers to use data services. Some smartphones have retailed for $50 during promotions with two-year contract, whereas last year, the floor on promotional prices was $100.

Smartphones share many features with traditional cellphones, including personal information management,

multimedia, games, and office applications, but smartphones are in a class by themselves because they feature a high-level operating system that runs third-party applications, IDC explained. Such operating systems include Android, BlackBerry, Linux, Mac OS X, Palm, Symbian and Windows Mobile.

On a worldwide basis, IDC estimates a 7.3 percent gain in 2008 shipments, down from the double-digit rates posted in the past few years as emerging markets went wireless. In 2009, sales will drop 2.2 percent before resuming growth of 7.7 percent in 2009, IDC said.