Mobile Terminals: Western Europe, (Executive Summary) Executive Summary

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1 Mobile Terminals: Western Europe, (Executive Summary) Executive Summary Publication Date: 6 June 2003

2 Authors Carolina Milanesi Ben Wood This document has been published to the following Marketplace codes: TELC-WW-EX-0602 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice

3 Mobile Terminals: Western Europe, (Executive Summary) Theanalysisinthisdocumentisbasedonasetof17MarketStatisticsreports covering 16 Western European countries and the whole region from 1998 to The books include data by mobile device category for shipments, revenue, average final price, retirements and installed base. Statistics are based on market research from the end of Links to these books are provided at the end of this document. Color Screens, Cameras and Aggressive Prices Fueled 2002's Sales The Western European market for mobile terminals ended 2002 ahead of Gartner's expectations. Sales to end users totaled million units, thanks mainly to strong sales in the fourth quarter. Replacement sales accounted for much of the growth. They were spurred by unexpectedly low prices for entry-level products, and three main design features: Color screens Cameras Polyphonic sound The desire of many people for a more fashionable phone also helped. Market Saturation Will Produce Three Years of Falling Sales We expect sales to reach just over 104 million units in Western Europe in 2003, which is slightly more than in But the market's saturation will result in small declines from 2004 to Their cumulative effect will outweigh the slight growth expected in Mobile Services Will Have More Impact in 2003 In 2002, consumers in Western Europe tended to buy terminals for their design and functions, rather than to access specific services. But promotion of new services by mobile network operators like Vodafone, T-Mobile and Orange did help sales in the second half of the year. Operators will continue to promote these services and especially Multimedia Messaging Service (MMS) in 2003, as the barriers to interconnection, interoperability and roaming are removed. Widespread incorporation of Java capabilities in terminals should also fuel replacement sales, if operators launch concerted marketing offensives for mobile gaming in the second half of W-CDMA Terminals Will Have Limited Appeal in 2003 Gartner has revised its forecast for terminals that support wideband code division multiple access (W-CDMA) in Western Europe, because of repeated delays in the widespread deployment of W-CDMA networks Gartner, Inc. and/or its Affiliates. All Rights Reserved. 1

4 2 Mobile Terminals: Western Europe, (Executive Summary) Also, we doubt that many Western Europeans will buy W-CDMA terminals in 2003, even in countries like Italy and the United Kingdom that have commercial W-CDMA networks. Most users, having upgraded their terminals during the past 18 months, will be reluctant to buy another one so soon, especially one based on a technology that is having teething problems. EDGE Terminals Will Account for Only a Third of Sales in 2007 Western Europe's market for terminals that support Enhanced Rates for Global Evolution (EDGE) will not live up to the industry hype. General packet radio service (GPRS) will be the dominant technology throughout the forecast period. Mobile operators TIM (in Italy) and O 2 (in Ireland) have stated a commitment to EDGE. But we think EDGE networks will remain limited to only a few countries. As a result, EDGE-enabled terminals will account for only 32 percent of sales by the end of The number of these handsets that will actually be used for EDGE services will be lower still. Compare the fate of high-speed circuit-switched data (HSCSD), which, despite having handset support, is little used (see Figure 1). Figure 1 Sales of Mobile Terminals to End Users by Technology Western Europe, Millions of Sales GSM HSCSD GPRS EDGE W-CDMA EDGE: Enhanced Data Rates for Global Evolution GPRS: general packet radio service GSM: Global System for Mobile Communications (mobile terminals in this segment may also support circuit-switched data) HSCSD: high-speed circuit-switched data W-CDMA: wideband code division multiple access Source: Gartner Dataquest (May 2003) 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 6 June 2003

5 Mobile Terminals: Western Europe, (Executive Summary) 3 Smartphones Will Multiply and Threaten the Future of Wireless PDAs Alleyesareonthefutureofsmartphones.Lessthanonemillionweresoldin Western Europe in 2002, but Gartner expects this figure to exceed 14 million by the end of 2007 and to account for 15 percent of total sales. In light of this, we have revised our forecast for wireless tablet PDAs and wireless clamshell PDAs. Sales of the former have not lived up to expectation, and theemergenceofmorepowerfulsmartphonesmakesthefutureofallwireless PDAs uncertain. Fashion Extends the Life of Basic Phones The introduction of Siemens' Xelibri fashion phones and the inception of the Nokia2100havemadeusreviseourforecastforbasicphones. We now expect a market for basic phones to exist until the end of After that time, all new terminals will support mobile data (see Figure 2). This will increasethedominanceoftheenhancedphonecategory. Figure 2 Sales of Mobile Terminals to End Users by Device Type Western Europe, Millions of Sales Wireless tablet PDAs Wireless clamshell PDAs Smartphones Enhanced phones Basic phones Source: Gartner Dataquest (May 2003) 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 6 June 2003

6 4 Mobile Terminals: Western Europe, (Executive Summary) Links Table 1 gives details of the 17 Market Statistics reports, each of which is published to Gartner Dataquest's Mobile Communications Worldwide and Telecom Equipment Europe Clusters. Table 1 Market Statistics for Mobile Terminals in Western Europe, Title Links Mobile Terminals: Western Europe, TCMC-WW-MS-0438 TCTE-EU-MS-0373 Mobile Terminals: Austria, TCMC-WW-MS-0440 TCTE-EU-MS-0374 Mobile Terminals: Belgium, TCMC-WW-MS-0441 TCTE-EU-MS-0375 Mobile Terminals: Denmark, TCMC-WW-MS-0442 TCTE-EU-MS-0376 Mobile Terminals: Finland, TCMC-WW-MS-0443 TCTE-EU-MS-0377 Mobile Terminals: France, TCMC-WW-MS-0444 TCTE-EU-MS-0378 Mobile Terminals: Germany, TCMC-WW-MS-0445 TCTE-EU-MS-0379 Mobile Terminals: Greece, TCMC-WW-MS-0446 TCTE-EU-MS-0380 Mobile Terminals: Ireland, TCMC-WW-MS-0447 TCTE-EU-MS-0381 Mobile Terminals: Italy, TCMC-WW-MS-0448 TCTE-EU-MS-0382 Mobile Terminals: Netherlands, TCMC-WW-MS-0449 TCTE-EU-MS-0383 Mobile Terminals: Norway, TCMC-WW-MS-0450 TCTE-EU-MS-0384 Mobile Terminals: Portugal, TCMC-WW-MS-0451 TCTE-EU-MS-0385 Mobile Terminals: Spain, TCMC-WW-MS-0452 TCTE-EU-MS-0386 Mobile Terminals: Sweden, TCMC-WW-MS-0453 TCTE-EU-MS-0387 Mobile Terminals: Switzerland, TCMC-WW-MS-0454 TCTE-EU-MS-0388 Mobile Terminals: United Kingdom, TCMC-WW-MS-0455 TCTE-EU-MS-0389 Source: Gartner Dataquest (May 2003) 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 6 June 2003