25 August 2006

European Mobile Phone Market Still Growing

The European mobile phone market is on a steady growth path, thanks to a healthy renewal cycle as users increasingly opt to adopt compelling feature phones.

The Western European mobile phone market, consisting of traditional mobile phones and converged devices, grew by 7% year on year in the second quarter of 2006 as shipments reached 41.4 million units compared to 38.5 in the corresponding quarter of 2005, according to figures released by market research company IDC.

While market forces continue to suggest that steady growth in the traditional mobile phone market is unsustainable as subscriber saturation in most Western European markets moves beyond 100% and operators continue to scrutinize costs and downsize portfolios, the second quarter of 2006 pitched in a healthy 7% growth.

"Further movement of WCDMA handsets into accessible price points including prepay bundles represented 21% of total shipments, and this, combined with the widespread introduction of highly compelling feature phones sporting comprehensive feature sets in innovative form factors, drove healthy renewal cycles in 2Q06, while the emergence of highly competitive prepay bundles invigorated demand at the low end," said Jean-Philippe Bouchard, senior research analyst, European Mobile Devices.

IDC emphasizes that while converged devices have consistently outperformed traditional mobile phones in recent quarters in terms of growth, the second quarter of 2006 saw converged device growth only marginally exceed that of traditional mobile phones as portfolio transitioning and device delays inhibited growth. IDC believes this further points to the strength of the feature phone in Western Europe.