Electronic Design

Wireless LANs Generate Excitement, Growth As Mobile Handsets Mature

Maturity is a fine quality in people, but a not such a good trait in business, as it is used to describe an established market that has entered a phase of slower growth and more elusive profitability. In the wireless market, mobile handsets, commonly called cell phones, have entered their maturity, with sales now following a seasonal cyclical pattern, rather than the prodigious annual growth track of years past. However, the wireless market is not without its fast-growing upstarts, namely the ultra-hot wireless-LAN (WLAN) segment, which is seeing sales boom due to the Wi-Fi phenomenon. At the other end of the spectrum is the ugly mobile communications infrastructure market, which suffered a disastrous year in 2002, with no relief in sight in 2003.

Total factory revenues for mobile communications will grow to $140.7 billion in 2007, up from $118.9 billion in 2002, representing a compound annual growth rate (CAGR) of 3.4%, iSuppli Corp. predicts. The figure presents iSuppli's revenue forecast for the mobile communications market.

The mobile handset market will grow from $68.7 billion in 2002 to $81.3 billion in 2007, for a CAGR of only 3.4%. In contrast, the boom years of 1999 and 2000 witnessed growth of 26% and 22% respectively, mainly due to strong growth in subscriber levels.

Nowadays, mobile handset growth increasingly is being driven by replacement sales, rather than by gaining new subscribers. The handset markets in many nations have reached effective saturation, which has served to slow subscriber growth, although Asia and particularly China still offer strong opportunity for increases.

In the mobile communications infrastructure equipment business, shipments are being affected by both end-market conditions and by the heavy financial burdens incurred by service providers during government auctions of wireless spectrum. Infrastructure suppliers will continue to experience steep declines and major losses in business in 2003, iSuppli predicts, but the company foresees a modest turnaround in their business in 2004.

Meanwhile, WLANs have taken off, with consumers and equipment makers rallying around the standard for Wi-Fi. Wi-Fi availability has increased, with more than 1200 hotspots now in the U.S. Thus, while the previous growth driver of the wireless industry has reached its maturity and slowed down, other segments are rising to add excitement.

TAGS: Mobile
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