Absolute growth may be slowing, but creative use of plastics and design is helping cellular telephone manufacturers to differentiate more-profitable models.
Yankee Group Research Inc. projects minimal 2006 global growth for mobile phones: 820 million units vs. 816 million last year.
Domestic 2006 shipments are projected at 126 million units, compared with 124 million last year.
``In the U.S., everyone who wants a cell phone has one,'' said John Jackson, analyst for mobile devices and handsets with Yankee Group in Boston. Penetration is about 57 percent.
``We have had three successive years of better-than-expected growth'' in developed markets, Jackson said.
Now, the market can expect ``real growth from emerging markets in China, India, Brazil and other high-population, low-wireless tele-density [countries]'' such as Vietnam, Indonesia, Malaysia, Russia and Nigeria.
Simplicity is critical in those markets. Nokia Oyj and Motorola Inc. are ``making concerted efforts to address these markets with lower-end products [costing] less than $40,'' Jackson said. Typically, the designs will have simple parts and ``no fancy bells.''
At the same time, manufacturers see more profit with higher-priced, low-volume products. They ``make less money on a $30 handset than a $230 handset in Western Europe,'' Jackson said. ``The $230 unit has higher plastic content, different types of plastics'' and more complex parts, such as multiple hinges.
Cellular telephone designers incorporate innovative components in new models, said David Linsalata, research analyst for mobile markets with International Data Corp. of Framingham, Mass.
Examples include ultrathin, clamshell-shaped phones such as Motorola's RAZR and Samsung Electronics Co. Ltd.'s SCH-V740.
Nokia subsidiary Vertu markets a high-end phone with a liquid titanium-blend bezel and polymers for functional components and support for electromagnetic- or radio-frequency-interference shielding.
``With the RAZR and V740, the emphasis is on being innovative with the design of the phone,'' Linsalata said. ``One aspect in shrinking the technology is to have the plastics be durable and yet flexible and strong enough to withstand drops.''
Linsalata projects 2006 global shipments of 858 million cell phones vs. 802 million last year, with growth rates particularly strong in Latin America, Africa and the Middle East. He projects shipments in the domestic market at 152 million units in 2006 vs. 147 million last year.
``Mobile phones are evolving beyond voice and text,'' Linsalata said, but users still want the same benefits, meaning no size or weight penalties for additional functions.
Strategy Analytics Ltd. forecasts 2006 global sales of 913 million wireless handsets vs. 815 million last year, according to Neil Mawston, associate director of the global wireless practice in the firm's Milton Keynes, England, office. The United States and Canada constitute nearly 20 percent of the world market.
For the quarter ended Sept. 30, Nokia had a global mobile phone market share of 32.6 percent, up from 31 percent a year earlier, Gartner Inc.'s Dataquest unit said. Among the other majors: Motorola jumped to 18.7 percent and regained second place from Samsung, which lost market share and had 12.5 percent. Sony Ericsson Mobile Communications AB, LG Electronics Inc. and Siemens had 6.7, 6.5 and 4.6 percent, respectively.
``Motorola has done an excellent job with its marketing campaign'' and was able to capitalize on Nokia's market-share problems over several quarters, said Tuong Nguyen, a Gartner mobile and wireless industry analyst in Lowell, Mass. In enhancing design, Motorola added RAZR models with colors other than the original silver.
At midyear, Ben Wood, Gartner research vice president in Egham, England, was projecting 2006 global sales of mobile units at 847.2 million, with 2005 accounting for 778.8 million.