Market Growth

Key drivers for the mobile telephone market growth include new wireless technology (3G) service availability and the replacement market for mobile phones with new capabilities such as camera phones, color displays, and increased accessory capabilities.

The mobile phone industry is transitioning from first-generation analog technology (1st generation “ 1G), through second-generation digital technology (2nd generation “ 2G), to high-capacity third-generation digital systems (3G). Because mobile telephone service providers gain increased system efficiency (more customers per tower) and have the ability to offer new and advanced service (that can be billed), this is resulting in aggressive offers from carriers to upgrade existing customers and add new customers to the new high-capacity systems. The number of mobile users reached 1.3 billion in 2003 [i].

As manufacturers offer mobile phones that have new capabilities that offer significantly improved lifestyles, customers will upgrade their mobile telephones to devices with these increased capabilities. Some of the key capabilities include camera phones, color displays, and wireless personal area network (WPAN) communications ability. The market for camera phones reached 3 million units in 2001, achieved 17 million units in 2002, and it should reach 60 million units by the end of 2003, and predictions show that camera phones will reach 165 million units by 2006 [ii]. The leading WPAN system in 2003 is Bluetooth. The upgrade or inclusion of Bluetooth with mobile telephone devices allows the connection of mobile telephones with many service-enhancing accessories such as wireless headsets, data transfer to PDAs and laptops, and printing.

Figure 1.2 shows the number of subscribers (left axis) and the growth in percentage right (axis) of the worldwide mobile telephone industry. This graph shows during the early 1990s, the industry growth had exceeded more than 30% each year. In the 2000 s, the growth had begun to decrease due to the high percentage of global market penetration (almost 25% of all people in the world had mobile telephones in 2003).

Figure 1.2: Global Cellular Market Growth 2003

Source: International Telecommunications Union (ITU)