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European mobile market grows 24% in 3Q04 according to IDC
Posted on 26-Nov-2004 08:20 | Tags Filed under: News

European mobile market grows 24% in 3Q04 according to IDC
According to market data for 3Q04 released by IDC, the Western European mobile phone market (mobile phones and converged devices) grew 24% year on year, with shipments exceeding 34 million units compared to 27.6 million units in 2003. Converged devices witnessed the most significant growth with 70% year on year compared to 23% in the mobile phone category, with both business and casual users attracted in growing numbers to the flexibility and functionality of an evolved operating system. However, standard mobile phones still dominate in 3Q, constituting over 95% of the total market.

Sales of mobile phones continued to be driven by vendors developing and heavily marketing devices, with an emphasis on attractive hardware and features as opposed to the advanced operating systems and software that characterize converged devices. Consequently, 3Q saw continued vendor progress in regards to the standard features incorporated within entry-level and midrange handsets.

"Features such as color screens and digital cameras characterized higher-end handsets just 12 months ago. However, with such features now incorporated in mid- and even low-range models, we are seeing a rise in consumer expectations as vendors seek to differentiate product offerings by appealing to consumers through attractive form factors and features," said Andrew Brown, program manager for European Mobile Devices at IDC.

IDC points to the percentage of standard handsets with color screens and digital cameras as evidence of the rate of evolution in the mobile phone market. Color screens are now found on over 80% of devices compared to just 49% in 3Q03, while the inclusion of digital cameras on phones displayed year-on-year growth of over 600% to total 72% of phones sold, compared to just 11% in 3Q03. 3Q also saw the volume of handsets with megapixel resolution cameras begin to grow. 1.3MP cameras are expected to become commonplace in high-end mobile phones and smartphones introduced in 2005. With growing media capability, IDC predicts vendors will increasingly include Bluetooth as standard as the ability to exchange data, in addition to connecting to wireless peripherals, becomes more important to users. 3Q04 saw the number of devices with Bluetooth rise to 36%, constituting year-on-year growth approaching 200%.

To date, converged devices have led the market in terms of the inclusion of advanced features such as high-definition screens and cameras, while offering the increased application power of an evolved operating system. 3Q04 saw this advanced product offering continue to shift the market from data-centric devices (PDAs) to voice-centric offerings in the form of smartphones with growing data capability. However, despite this growth, IDC would emphasize that smartphones still have a long way to go before they ship in proportions to rival standard mobile phones.

"Despite enjoying year-on-year growth of over 70%, smartphones still represent under 5% of the total mobile phone market. With standard mobile phones becoming increasingly advanced in terms of hardware features, most consumers cannot identify any significant differences between the handsets. While the smartphone market will continue to grow, greater communication is required from both vendors and operators before they rival mobile phones in the consumer space," said Geoff Blaber, research analyst, European Mobile Devices at IDC.

With smartphones driving significantly higher ARPU compared to standard mobile phones, IDC predicts an increase in the promotion such devices receive, particularly in the wake of new product introductions in 2005.

In terms of overall vendor performance, Samsung, Sony Ericsson, and Motorola all enjoyed significant year-on-year growth buoyed by new product launches accompanied by sustained promotion. Increased market competition meant Nokia witnessed negative growth of -8% and a fall in its overall market share to 34%. However, the Finnish vendor remains the clear market leader and IDC predicts a strong 2005 with a host of new product launches both in mid- and high-range mobile phone segments as well as in the Series 60 smartphone category.

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