Mobile device shipments to double by 2014, convergence will end: Analysts

A recent ABI Research report says that the shipment of all categories of wireless devices, including mobile handsets, mobile Internet devices (MIDs), netbooks, mobile consumer electronics products, and cellular modems was estimated to be 120 crore (1.2 bn) in 2009. The interesting part is that the volume of shipments of these devices will touch nearly 225 crore (2.25 bn) by 2014, almost double the shipment volume of 2009.

No wonder that the shipments will double in another five years as the world is increasingly becoming mobile. In populous countries like India and China, the teledensity is far from saturation point. In India, already the metros have achieved more than 100% teledensity in mobile handset segment. But, what about rural teledensity? It has not even reached 20% mark; currently, it stands at 19% and this has miles to go to reach its saturation level. Though rural teledensity in India might not reach 100% in another five years, certainly a significant increase in terms of mobile handsets will contribute to this 225 crore estimate. In the wireless device segment, mobile handset shipment is the major one.

Industry analyst Michael Morgan has commented that the next five years will see a shift in the breakdown between types of mobile devices shipped. He says, "Today, wireless handsets rule the roost, with other mobile devices accounting for only 4 crore (40 mn) shipments and cellular modems only 6 crore (60 mn). While handset shipments did actually decrease between 2008 and 2009 due to the global recession, the other two segments in fact grew very aggressively.” "Handset sales are growing at only 4%, while cellular modem shipments are expected to grow by 40% annually, and ultra mobile devices by 67%. These newer categories represent very attractive market opportunities and new revenue streams for operators," he adds.

The ABI Research reports that these developments put smartphones in direct competition with a variety of other device segments As Morgan says, "The convergence period for cellular communications is coming to an end, and now we're entering a period of divergence. For many devices, the technology is already in place; it's just the business and billing models that need to be built."

This means that some handset vendors may need to seek a greater part of their business in the low cost and ultra-low cost segments, while MIDs and netbooks will have to better define their unique use cases and value propositions. The same will apply to cellular modems, and operator subsidies will also have an important influence on the sale of these devices. According to a recent report by the Nielsen Company, about 82% of mobile handsets in use are simple phones available at low cost at less than $50. They have limited functions, and ease-of-use factor is the greatest driving force for this low cost handset markets.

Convergence turning into divergence is an interesting point to be noted. We have been speaking of convergence all the time. But going by the observation of analysts like Morgan and also what users of high end phones are asking for, it seems convergence will take a U turn to divergence. It is because too much of convergence and converged applications in one wireless device will become too complicated for the consumer to handle. Another pertinent question arises here among the consumers is: how much will be compromised on the quality of applications in the name of convergence? Also, in the converged devices, longevity factor is at question.

Kannan K

kannan@cybermedia.co.in