Add another voice to the growing chorus of conservative growth forecasts for global handset sales this year.
IMS Research last week forecast less than 6% growth, near the low-end of recent estimates by various parties and in contrast to the 10% growth forecast by Nokia Corp. at the end of 2007. Past years have seen consistent growth in the double digits.
Nokia, which reports its first-quarter earnings April 17, will have the industry’s ear when it speaks – the company holds at or near 40% global market share and it could use the occasion to reiterate or revise its own estimate.
The 5.6% growth forecast by IMS Research reflects stark disparities in growth among global market regions. Two drags on the overall outlook are a cooling economy in the United States and market saturation in Western Europe – both are largely mature markets where growth depends on the rate of sales of replacement handsets.
The Americas are likely to see 7% growth while Europe experiences more than 1% negative growth.
“Growth in these areas is entirely dependent on consumers not only replacing existing handsets, but also purchasing additional handsets on the basis of specific features or aesthetics,” said Bill Morelli, analyst at IMS Research.
In contrast, China and India will continue to grow strongly at a nearly 11% rate, according to the research firm.
Reading the tea leaves
The firm cited recent warnings on softening demand from Texas Instruments Inc. and Sony Ericsson Mobile Communications to bolster its conclusions – factors cited by other analysts in recent weeks to explain their own tightening.
“Demand is not as strong for high-end handsets, especially in mature markets,” Morelli said.
The analyst pointed out that a 50% global penetration rate left ample room for growth, much of it expected in Asia, Africa and the Middle East.
Since Nokia delivered its benchmark outlook of 10% in January, analysts have scoured for signs that would “move the needle” on growth estimates.
At the low end of various outlooks, analyst Tero Kuittinen at Avian Securities L.L.C., has forecast a conservative 4% growth for this year. He based his forecast on signs of softness in European 3G handset sales – essentially the upshot of the TI and SEMC warnings – and upgrade sales in urban Chinese markets.
“To get to 10% annual growth, we’ll need to see massive handset upgrade sales,” he said recently.
For the U.S. – one of those upgrade markets – Samsung Electronics Co. Ltd. has projected “mid-single digit” growth, which conceivably means something akin to 4% to 6%, though Samsung won’t be more specific.
Finally, semiconductor research firm Forward Concepts is forecasting 9% growth, based on complex modeling for global demand for chips.
Most agreed: the crucial fourth quarter remains distant enough that it cannot yet be seen clearly. And a raft of high-tier, touchscreen handsets are widely expected to the hit the market this fall, tempting shoppers whose confidence in the economy and their personal prosperity could tip the scales either up or down, from New York to Munich to Beijing.
