Report: Mobile Phone Revenue To DeclineReport: Mobile Phone Revenue To Decline

MANHASSET, N.Y. — Due to slowing growth and falling prices, global mobile-phone market revenue is expected to decline in 2006, and will not recover to the peak level of 2005 until 2009, predicts market research firm iSuppli.iSuppli (El Segundo, Calif.) projects that global revenue from mobile phone production will decline to $109.7 billion in 2006, down 4.7 percent from $115.1 billion in 2005, which represented the historic high for the market. Revenue will grow by single-digit percentages, recovering to its 2005 level of $115.1 billion by 2009.The firm attributed a major factor behind the revenue contraction to the decelerating growth rate of mobile-phone unit production. With most global markets saturated, growth in mobile-phone manufacturing is being driven by replacement sales, rather than by new subscribers, slowing growth.After rising by 30 percent in 2003, 25.1 percent in 2004 and 13.6 percent in 2005, global mobile-phone unit production growth will decelerate to only 4.9 percent in 2006, rising to 850 million units, up from 810 million in 2005. Growth also will slow on an absolute basis in 2006, with factory production rising by 40 million units for the year, compared to 97 million in 2005, 143 million in 2004 and 131.5 million in 2003.Also contributing to the falling revenue are average selling price reductions iSuppli said are accelerating.Mobile-phone average selling prices expected to decline to $129 in 2006, down 9.2 percent from $142 in 2005. This follows a fall of 8.5 percent in 2005 from $155 in 2004.By contrast, average selling prices deceased by 2.7 percent in 2004.However, average selling price erosion will settle down in 2007, with the average price declining to $128, down only 1 percent from 2006, iSuppli predicts. Pricing will decline by only half a percent in 2008 and 2009.The rising production of high-end 3G phones will offset continuing pricing erosion in low-end models, slowing erosion in average selling prices, according to iSuppli analyst Scott Smyser.