Emerging markets to buoy bottom end of handset market

As the mid-tier handset market takes a beating and developed markets increasingly adopt high-end gadgets, strong growth is also predicted in the low-cost handset space.

Figures released by industry analyst Juniper Research this week forecast that, between 2009 and 2014, annual sales of low cost mobile handsets will rise by 22 per cent to over 700 million.

It’s no secret that operators and device manufacturers are increasingly looking to emerging markets to fuel future growth in the mobile space and the development of very low cost handsets and devices is critical to achieving this aim.

The research house note that efforts by industry players to lower the TCO (total cost of ownership) for devices and services to the sub $5 mark are already reaping the benefits in markets such as Bangladesh, Pakistan and India.

However, it is the Africa & Middle East region that is expected to account for the largest annual shipment volume by 2014, with 166 million low cost handsets predicted to be sold, representing 24 per cent of all sales that year and up by 54 per cent since 2009.

But there has also been a lot of noise about the raid growth of the smartphone sector, with Juniper predicting that smartphones will account for 27 per cent of mobile device shipments in 2014, up from 13 per cent in 2008.

This means the market is effectively polarising into two groupings – entry level and high end devices – with the mid range market, mainly played in by Motorola and Sony Ericsson being squeezed.

So players such as Nokia are developing content driven services that will encourage first time mobile users to keep on using their devices and improving their standards of living. Such initiatives include Nokia’s Life Tools suite, which is a range of agriculture, education and entertainment services designed specially for consumers in small towns and rural areas of the emerging markets. The service provides information customised to the user’s location and personal preferences directly on their mobile phones.

“With around 80 per cent of new mobile users set to come from emerging markets over the next six years, it is essential that operators and vendors work together to dilute the price barriers associated with mobile technology and to provide ongoing support through the development of specific social and personal services, such as Nokia’s Life Tools suite,” said Juniper analyst Andrew Kitson. “However, it is clear that commercial success will only be achieved if operators adopt revolutionary new business models and if governments can be persuaded not to place excessive taxes and duties on device sales and imports,” said Kitson.

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