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Total worldwide shipments will reach 412 million units in 2001, according to the report entitled "Erratic Signal: Worldwide Handset Market Forecast and Analysis, 2000-2005."
Nevertheless, the worldwide handset market is still on track to reach 672 million units in 2005, representing a compound annual growth rate of 10.9 percent between 2000 and 2005.
"The first half of 2001 has been very disappointing, and even reaching 412 million units is a push," Weili Su, senior analyst for IDC's Smart Handheld Devices program, told ElectricNews.Net. "Our forecasts for the rest of 2001 are pretty solid," she added.
According to Su, the handset industry has been a victim of its own hyperbole and thus failed to deliver in accordance with expectations.
She said that the near- and medium-term handheld markets were uncertain because of factors including uncertainties surrounding the introduction of next-generation technologies, and delays in the availability of 2.5G and 3G mobile handsets.
The possibility of a recovery in the handset market will depend increasingly on the replacement market, according to the report. However, this market is likely to suffer from a weak 2.5G and 3G offering due to the timing of the introduction of these technologies.
"With an IT recession in the US and deteriorating conditions in Europe and Asia, handset manufacturers and wireless carriers will be faced with slumping consumer demand despite any new services they may roll out over the next year," said Randy Giusto, vice president of IDC's mobile and desktop research.
Nevertheless, the advent of 2.5G and 3G is likely to drive handset growth in the long term as compelling content and applications become available at more reasonable cost, according to the report.
The IDC report follows comments made by Nokia in July 2001 that global handset sales may achieve very little or modest growth from the 405 million units sold in 2000.
In contrast, Texas Instruments, which supplies more than two thirds of the semiconductors used in mobile phones globally, says it sees the first signs of a rebound in global demand as inventories clear, according to Bloomberg. Richard Templeton, chief operating officer of Texas Instruments, said that more Texas customers were placing orders, suggesting that demand would rebound in the second half of 2001.
Meanwhile, the IDC report comes alongside an announcement by Sony and Ericsson that the proposed merger of their mobile divisions has been completed, a move that is expected to produce increased revenues for the companies.
IDC is at http://www.idc.com
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