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  • Mobile Handset Industry Considers Recession to be Over

    According to recent iSuppli report, the mobile handset industry is proclaiming the end of the recession for the segment following an outstanding final quarter of 2009 and a projected substantial growth for smart phones in 2010.

    The report shows that the mobile handset industry closed 2009 with shipments of 1.15 billion handset units.

    While that number is down from the overall 2008 figure of 1.2 billion handsets, shipments in the fourth quarter of 2009 represented the culmination of an increasing growth pattern throughout all of last year. Compared to third-quarter shipments of 290 million, about 335 million mobile handsets shipped in the fourth quarter, up 15.5 percent.

    “Given the recovery of the market in the final quarter of 2009, and with Europe, Latin America and the Middle East/Africa regions doing exceptionally well during the period, the recession can be said to be officially over for the industry. The continued growth this year of total handsets—up a projected 11.3 percent to 1.3 billion units—further bolsters such a view,” iSuppli maintains.

    Among the various handset categories, smartphones are projected to expand 35.5 percent in 2010. According to the report, smartphone growth will be driven by a number of promising developments, including the introduction of entry-level smart-phones, enthusiasm from vendors across the mobile phone and PC industries, the prevalence of 3G network deployments and the promotion of data-centric services in mature markets.

    With handset shipments in the fourth quarter of 2009 amounting to approximately 257.6 million units, the Top 5 players accounted for a whopping 77 percent share of the total handset market.

    The report says that Nokia remained the leader of the handset market, shipping 126.9 million handsets during the period, giving it a 37.9 percent share of market. Runner-up Samsung, which has introduced its own smart-phone operating system, held the No. 2 spot with 20.6 percent share.

    The remainder of the Top 5 are rounded out by LG Electronics, in third place with 10.1 percent share; Sony Ericsson in fourth, with 4.4 percent share; and Chinese giant ZTE, whose impressive 77 percent growth from the earlier quarter vaulted it into fifth place, with a 4.0 percent share.

    A second Chinese handset manufacturer, Huawei, landed in seventh place after also finishing an outstanding quarter with 82.4 percent growth.

    “Together, the two Chinese companies indicate the strong momentum occurring in the emerging market as well as an increasing presence in Europe on their part with key operators,” said Tina Teng, iSuppli senior analyst.

  • IPTV Set-Top Boxes to Gain Increasing Foothold

    Set-Top Boxes sold into the up-and-coming Internet Protocol TV segment will ramp up in terms of shipments and revenue in the years to come, offering increasing competition to legacy products in the STB market, according to iSuppli.

    In the recent report iSuppli says STB equipment sold into the IPTV market is projected to grow to 58 million units in 2014, up from 19.4 million in 2009. Revenue will rise to $6.2 billion, up from $2.9 billion in 2009.

    For these IPTV STBs, which allow the delivery of television services over a high-speed digital network and provide guaranteed quality of service, the numbers translate into a Compound Annual Growth Rate (CAGR) of 25 percent for unit shipments and 16 percent for revenue.

    All told, IPTV STBs accounted for 14.7 percent of total set-top box unit shipments in 2009, and are expected to make up 29.1 percent of shipments in 2014.

    In order to fulfill the promise of exciting interactive applications held forth initially by the IPTV industry, iSuppli believes further innovation is needed to differentiate IPTV services from those offered by the cable and satellite providers.

    In comparison, the legacy STB market consisting of the cable, satellite and terrestrial segments will end 2009 with unit shipments of 132 million. Unit shipments for this market are projected to reach 199 million in 2014, rising at a CAGR of 8.6 percent for the forecast period.

    IPTV Players and their Crowded Playground
    According to iSuppli, the principal difference between legacy STBs and their IPTV counterparts lies in the way the boxes receive information: IP STB equipment receives video content over a broadband pipe via Internet Protocol data packets, while legacy boxes receive an RF-modulated signal. Furthermore, IP boxes do not require a tuner and demodulator, which are requirements for legacy boxes.

    With more than 60 vendors claiming to have an IPTV STB product, the IPTV equipment market remains highly fragmented. However, just 15 vendors supplied 92 percent of the market in 2009. Motorola Inc. was No. 1 with 32 percent market share, followed by Cisco Systems Inc. with a 14 percent share.

    Among companies involved in supplying the platform software for IPTV boxes, Microsoft Corp. held sway with its Mediaroom middleware, accounting for 25 percent of the market with 4.8 million STBs in 2009. Microsoft had three times the share of its closest rival—French-based Thomson SA with its SmartVision software.

    As in the PC industry, Microsoft is driving the technical requirements that will shape product offerings from silicon vendors and makers of STBs alike, iSuppli believes.

    Next-generation media processors will also ramp up in 2010. Newcomer Broadcom Corp. is expected to lay siege to Sigma Designs with its BCM7405 processor—recently certified for Mediaroom deployments—ending the advantageous position of Sigma Designs as sole provider of Mediaroom-certified processors.

    Nonetheless, Sigma Designs is expected to fire back, and its next-generation SMP8650 family of processors will benefit from the company’s incumbent position in many existing IP STB sockets.

  • Femtocell Base Stations Poised for Spectacular Growth

    The research group iSuppli says that the ecosystem surrounding femtocells, or cellular base stations that improve indoor wireless coverage, is headed toward critical mass among all major nodes of the wireless supply chain and will vault into explosive growth after reaching a decisive watershed this year.

    According to iSuppli’s projections, unit shipments of femtocells will more than triple this year, rising to 1.9 million, up from 571,000 in 2009. A period of phenomenal expansion then will follow, with shipments reaching 7.2 million units in 2011, up 289 percent from 2010.

    Shipments will rise by 232 percent to reach 23.9 million units in 2012 and by a whopping 657 percent to hit 39.6 million units in 2013.

    “Throughout the wireless supply chain, companies are busy mobilizing to provide solutions for femtocells, which resemble Wi-Fi routers in appearance,” said Francis Sideco, principal analyst for wireless research at iSuppli.

    “Instead of enabling wireless local area networks, however, femtocell base stations improve 3G coverage inside buildings or homes—locations where wireless signals tend to be weak because of building materials blocking the signal or the site’s distance from a cell tower.”

    Among participant nodes, Tier 1 entities in the United States and major global operators like Vodafone Group plc in the United Kingdom have launched femtocell solutions. Commercial deployments also are being launched by an increasing number of carriers around the world.

    In addition to carriers, several device manufacturers are firming up their femtocell positions after recently announcing the selection of England-based company picoChip to supply the key baseband chipset components for their products.

    Femtocells likewise are being evaluated by chipset suppliers such as Qualcomm and Texas Instruments, which are examining entry strategies for breaking into the market, as iSuppli reminds.

    According to Sideco, given the inherent use cases and environmental requirements of indoor deployments, self-optimizing networks are essential to the success of femtocells.

    “While technical and commercial challenges remain, femtocells are proving to be viable solutions for players in the wireless industry—especially mobile network operators—seeking to optimize their resources in providing seamless wireless coverage inside indoor environments,” says iSuppli.

  • iSuppli: iPad Will Be a Sales Success for Apple

    The research group iSuppli says while the iPad has met its lofty expectations and is likely to be a sales success for Apple, the jury is still out as to whether the tablet will define or redefine the technology market to the same degree the other products like Apple II, the Macintosh, the iPod and the iPhone have.

    “In terms of features, product design, software and content, the iPad delivered on all its promises,” said Dale Ford, senior vice president at iSuppli.

    “And at a starting price of $499, the product even exceeded expectations. However, with the iPad straddling multiple product categories and with the usage model for the product still unproven, it likely will be a number of quarters after shipments begin before whether we know the product will have a revolutionary impact on the technology world.”

    The iPad seems to occupy a position somewhere between the smart phone, the e-reader and the netbook PC. “The question for Apple is what is the usage case for such a product?” said Dr. Jagdish Rebello, senior director and principal analyst iSuppli.

    “What does it do that other products don’t do—and what does it have that will make a large number of consumers want to buy the product?”

    According to the analysts, the killer app for the iPad appears to be delivery and presentation of content. “The iPad’s portability, built-in iPod, display, touch interface, wireless connectivity and powerful processor make it ideal for convenient viewing of all types of content, from photos, to videos, to music, to games, to e-books, to online newspapers,” they say.

    Rebello claims that what Apple is trying to do with the iPad is to try and create a new market by stimulating new user behavior and new use cases. “So while the iPad might appear to compete with many existing products in specialized markets like eBooks, tablet PCs and PMP/MP3 players, the success of the produce is intrinsically linked to its capability to change consumer behavior,” he says.

    “The iPad will be a game changer if it becomes the Trojan horse that changes the slowly dying print information business to an electronic information market,” said Egil Juliussen, principal analyst and fellow at iSuppli.

    Analysts ensure that it’s not hardware that makes an electronic product different and unique. “The ingredients of Apple’s iPhone are similar to the other 1.1 Billion phones sold in 2009. What makes the iPhone so different, prompting sales of 8.7 million last quarter, is its unique usability, convenience and content,” they say.

    “The iPad has similar traits to the iPhone—being the right enabler at the right time” said Steve Mather, principal analyst for iSuppli.

    “For investors and corporate leaders, it’s all about identifying trends early, positioning for success. To this end, we believe an area centered on usability, convenience, and emerging content on the Internet, will prove increasingly relevant in the coming years. Furthermore, we believe Apple’s iPad will prove a unique enabling device, connecting new apps and content with emerging behavior trends.”

    While many early reviews concluded the iPad is simply a bigger, faster iPhone, iSuppli believes it more closely resembles Apple’s iPod touch. The research group thinks this is because the iPad is available in a version that includes Wi-Fi as its exclusive wireless connection, the same as the iPod touch.

    Because of this similarity, the initial total available market for the iPad may be similar to that of the iPod touch. During the first four quarters after its introduction, Apple sold a total of 8.3 million iPod touch units, according to iSuppli.

    Over the longer term, the iPad will benefit from Apple’s large and loyal customer base, as the analysts claim.

    “The iPad’s success is expected to be substantial because a significant portion of the 200 million plus users of iPhones, iPods and Macintoshes will want one,” Juliussen added.

    Related articles
    The Apple iPad is Here
    Is an iPad a Revolutionary Device?

  • iSuppli: Nexus One Serves as Research Tool for Google

    Google’s new Nexus One smart phone serves as a showcase for the latest version of the Android operating system and will allow the company to gather critical user data for developing new software, according to iSuppli.

    "With a plethora of smart phones based on the Android operating system already on the market, questions have arisen as to why Google would begin selling its own phone equipped with the operating system," said Tina Teng, iSuppli senior analyst for wireless communications.

    "iSuppli believes the Nexus One allows Google to demonstrate all the capabilities of its operating system more effectively than other phones that employ customized versions of Android. The Nexus One also gives Google direct access to end customers, yielding key information on how users interact with applications and utilize data."

    Such information will be pivotal as Android-based phones strive to gain market share in the burgeoning smart phone market. iSuppli predicts global smart phone shipments are set to rise considerably, more than doubling from 181 million in 2009 to 439 million in 2013.

    According to iSuppli, with Google having directed the entire design of the Nexus One, including the hardware, applications and operating system, the phone exemplifies all the capabilities of version 2.1 of Android.

    In contrast, other Android-based phones, such as Motorola’s Droid, have personalized the operating system to suit their own hardware designs and services.

    "The Nexus One will help Google popularize Android by showing what the operating system can really do," Teng said.

    Beyond serving as a technology demonstrator for Android, the Nexus One gives Google direct access to consumers’ use patterns.

    Teng said Google can embed an applet into the Nexus One that can send reports on user behaviors back to a company database for analysis.

    iSuppli believes the Nexus One is a compelling device in terms of functions and capabilities. However, the product will still face significant competitive challenges.

    "Google will have to bundle innovative software with the Nexus One to combat its strongest competitor: Apple’s iPhone," Teng said.

  • 3G and Wireless Data Boom in China

    The release of 3G licenses in China is spurring a wireless data boom, with national revenue from such services rising by 18.9 percent in 2009 and nearly doubling from 2008 to 2013, says iSuppli.

    According to the research group, as the one-year anniversary of the issuance of 3G licenses in China approaches, wireless data revenue, including both messaging and non-messaging service, is set to rise to $19.3 billion in 2009, up from $16.3 billion in 2008.

    By 2013, data revenue will surge to $31.5 billion, increasing at a Compound Annual Growth Rate (CAGR) of 14.1 percent from $16.3 billion in 2008.

    iSuppli predicts that non-messaging revenue soon will exceed messaging revenue as carriers expand mainstream adoption of 3G services. Non messaging service revenue will reach $20 billion in 2013, up by a factor of three from $6.8 billion in 2008.

    “The rapid growth of China’s data services is being enabled by the monumental spending of the nation’s wireless carriers on mobile infrastructure equipment,” said Will Kong, an analyst covering China research at iSuppli.

    “The carriers this year will spend about $6.3 billion on mobile infrastructure equipment, up 28 percent from 2008. This will represent a near-term peak, with spending in 2010 declining by 2.4 percent to $6.1 billion. During the next five years, carrier spending will continue to decline but will remain at a high level of more than $5.5 billion annually.”

    Kong claims that, although China Mobile achieved strong financial performance this year, its subscriber growth rate will decline. This is because China Telecom and China Unicom will place greater competitive pressure on China Mobile, especially in non-messaging services, by leveraging their network and handset advantages.

    In fact, China Mobile already has lost substantial market share in terms of new subscribers. The company’s share of wireless subscribers dropped to 58.2 percent in September, down from 78 percent in January.

    iSuppli forecasts mobile subscribers at China Telecom and China Unicom will exceed 100 million and 200 million, respectively, in 2013. By leveraging their advantages in networks and handset products, China Telecom and China Unicom will place even more pressure on China Mobile.

    iSuppli expects that China Mobile’s incremental market share will be stable at around 60 percent for the next few years.

    China Telecom and China Unicom will continue to subsidize mobile phones in order to provide attractive consumer prices.

    And both carriers will be supported by their parent companies, keeping them solvent. iSuppli also believes China Telecom and China Unicom will focus on long-term returns to gain more market share rather than on short-term profits.

  • iSuppli: California Regulations Could Cut LCD-TV Energy Use Worldwide in Half

    New television power consumption limits imposed by California’s Energy Commission (CEC) could cut aggregate annual power consumption of LCD-TVs worldwide in half by the year 2013, if these standards are adopted universally, according to iSuppli.

    If all of the 200 million LCD TVs set to be shipped in 2013 complied with the CEC standard, they would use a total of 64.4 billion kilowatt hours for the year, compared to 126.8 billion if they didn’t, iSuppli estimates.

    Analysts say this represents a 50 percent decline in power consumption. With indications that other states may follow California’s lead, and with the United States the world’s largest LCD-TVs market, it’s conceivable that CEC-style regulations could spread throughout the country and the world.

    The U.S. Consumer Electronics Association is warning that the CEC mandates will have a deleterious impact on consumer choice and technological innovation. The trade organization stated the regulations will result in higher prices for consumers, job losses for Californians, and lost tax revenue for the state.

    iSuppli believes the regulations could reduce California tax revenue as consumers purchase larger-sized LCD-TVs through out-of-state channels. Furthermore, the regulations could cause a cessation in sales of certain products in the state, such larger-sized plasma televisions.

    However, with both the industry and consumers already embracing greener televisions that consume less power, the negative impacts of the CEC regulations are likely to be limited.

    “While the CEA has legitimate concerns, the CEC regulations simply follow suit with the EPA’s Energy Star 3.0 and 4.0 guidelines,” said Randy Lawson, senior analyst, display electronics, for iSuppli.

    “Television makers already have been working to cut the power consumption of their products so they can earn the coveted Energy Star label.”

    Furthermore, iSuppli’s research indicates that consumers increasingly are aware of power consumption issues, and are likely to gravitate toward sets that use less electricity.

    “Because of this, television brands will still be offering a plethora of product choices that will be attractive to consumers,” said Lawson.

    An iSuppli survey revealed that 46.1 percent of U.S. consumers in the third quarter said green factors influenced their television purchasing decisions. The same survey showed that 43.4 percent of those consumers considered power savings to be the most important green feature.

    According to iSuppli, the ever-more-restrictive television power consumption standards in California and elsewhere definitely will impact the path of technology development for flat-panel TVs, affecting panel materials, LCD backlight designs and system audio/video electronics.

    Lawson said, “Many design changes will occur in the television electronics and OEM-enabled features, including technologies like ambient light sensing to help enable intelligent backlight drive options.”

  • iSuppli: Cloud Computing Can Effectively Leverage Blade Servers and Virtualization

    Although global shipments of blade servers are set to decline in 2009, the market is expected to return to robust double-digit growth during the following years as global economic conditions improve, according to iSuppli.

    Blade server shipments will amount to 1.04 million units in 2009, down 9 percent from 1.14 million in 2008. This contrasts sharply with the 31.1 percent increase in 2008.

    “In its short history, the blade server market has been able to slash through whatever obstacles the global economy and technology business have placed in front of it. However, in 2009, the blade servers couldn’t cut through the global economic downturn, causing shipments to decline for the first time ever,” said Peter Lin, the iSuppli analyst.

    iSuppli has been continually reducing its shipment forecast throughout the year. According to them, the main factor impacting the market is conservative corporate Information Technology spending at the end of 2008 and in 2009 resulting from the recession.

    Analysts expect that the blade server market will regain its edge somewhat in 2010, when the worldwide economy improves. By 2013, the market will more than double from its 2008 level to more than 2 million units.

    During the period from 2008 to 2013, the blade server market will expand at a CAGR of 13.9 percent, 10 times higher than the server market as a whole. By 2013, blades will account for 23.1 percent of all server shipments, up from 12.9 percent in 2008.

    “This clearly indicates that the blade segment will be the fastest-growing and most important segment of the server industry through 2013,” Lin said.

    Although iSuppli has reduced the total server shipment forecast due to the worldwide economic recession, the company retains its belief that virtualization offers a number of benefits in the consolidation of server infrastructure.

    “Virtualization provides a more efficient server roll-out strategy, which will accelerate enterprise adoption. Therefore, iSuppli’s virtualization forecast is a mid-to-high penetration scenario, where we believe virtualization server penetration of total server shipments will rise at a CAGR of 18.8 percent during the period from 2008 to 2013,” iSuppli states.

    The research group also believes that cloud computing can effectively leverage blade servers and virtualization. “Seeing the potential for cloud computing, there is a race among the main players, which iSuppli believes will become increasingly fierce as the demand for cloud computing keeps growing,” they say.

    According to iSuppli, cloud computing will have a negative effect on server shipments. However, they say, there will be more applications released and users will demand better service levels. Therefore, the demand from the cloud computing service providers will keep increasing, which will offset the negative effect, as they claim.

  • Samsung Retakes Leadership in U.S. LCD-TV Market

    Samsung in the third quarter retook the No.-1 ranking in the U.S. LCD-TV market from chief competitor Vizio, according to iSuppli.

    The iSuppli research shows the South Korean electronics giant shipped 1.3 million LCD-TVs in the United States during the period from July through September, equaling a 16.8 percent share of the market.

    This gave Samsung a 1.1 percentage point lead over U.S.-based Vizio, which held a 15.7 percent share in the third quarter with shipments of 1.2 million LCD-TVs.

    The last time Samsung held the top spot in the U.S. LCD-TV market was in the fourth quarter of 2008. “Vizio in the first and second quarters of 2009 took the lead in the United States as consumers warmed to its low-cost, full-featured sets sold through high-volume retailers like Wal-Mart,” the report says.

    “However, Samsung in the second quarter began to regain momentum and increase its market share as the company focused on advanced LED-backlit LCD-TVs and reduced prices for its high-end sets.”

    According to Riddhi Patel, principal analyst, television systems, for iSuppli, Samsung is leading the LCD-TV industry’s adoption of LED backlighting technology.

    “The company has been marketing these sets intensely, attracting the interest of U.S. consumers. Consumers like LED-backlit LCD-TVs because of their ultra-thin form factors. With Samsung cutting the prices of these sets aggressively, they now are becoming increasingly affordable for a larger number of U.S. consumers,” she said.

    The report also shows that the United States now leads the world in sales of LCD-TVs with LED backlights: LED-backlit sets accounted for 3.7 percent of total U.S. LCD-TV shipments in the third quarter, up from 2.1 percent in the second.

    Samsung in October was selling 55-inch LED-backlit LCD TVs for $2,650, just $325 more than for equivalent-sized and featured sets using conventional Cold-Cathode Fluorescent Lamp (CCFL) backlighting technology.

    “This low price point and minimal gap with CCFL sets represents a critical price threshold for LED-backlit sets, making them more acceptable to U.S. consumers,” Patel said.

    She adds that most of the Top-5 LCD-TV brands in the U.S. saw their shipments and market shares decline in the third quarter compared to the second, as smaller companies increased their sales.

    iSuppli predicts the fourth quarter, which brings the Christmas selling season, will bring stronger shipment growth because of aggressive discounts for full-featured LCD-TVs.

    “Furthermore, retailers are expected to offer attractive deals on product bundles. Such bundles will include LCD-TVs sold with Blu-ray players, surround-sound systems, DVRs, game consoles, and installation services. Premium brands such as Samsung, LG and Sony are expected to lead the way with these packaged deals,” Patel said.

  • iSuppli: Does Google’s PND App Signal the Swan Song of Dedicated Devices?

    For European Portable Navigation Device (PND) manufacturer TomTom and U.S.-based Garmin, Oct. 29, 2009 will indeed be remembered as the day everything changed.

    “Google’s announcement that it plans to launch turn-by-turn navigation on the Android platform would be enough of a headache in itself, but giving it away for free? Sound the alarm!,” says Richard Robinson, iSuppli analyst.

    There has to be some sympathy for PND and navigation device vendors that have spent the last year redefining their businesses in the light of the economic shock that crunched the world economy beginning in the fourth quarter of 2008.

    “But clearly, the announcement from Google is a bit like arriving at work one day to find one of the biggest brands in the world has moved in next door, and is offering a version of your product to consumers—for free,” Robinson says.

    According to him, what is concerning is that TomTom and other EU-based navigation providers are heavily dependant on the success of their hardware and software products, while for Google, this product will represent yet another very small cog in a much more complex machine that is being built to increase the footfall to their paid advertising.

    “Ironically – he continues – the hang over that awaits existing navigation providers is a slice of history repeating itself. Back in 2004, when TomTom released the first PND into the European market, heads were bowed; particularly in the boardrooms of the Japanese electronics manufacturers that dominated the in-dash navigation market.”

    He claims Japanese Tier-1 companies such as Alpine, Panasonic and Pioneer, as well as Harman Becker in Europe, were simply not able to counter the threat from the much cheaper and more flexible portable device sector that was taking hold in Europe. “While the rest of the world looked on, these new kids on the block cleaned up during the next two to three years, with triple-digit growth the norm for all PND suppliers.”

    “So here we are again, but this time the game has changed for good. Clearly, the take-it-or-leave-it nature of free application downloads will do nothing to boost the image of navigation as a smart product. So it’s no surprise that both TomTom and Garmin’s shares have been badly hit since the announcement on October 28th,” Robinson adds.

    iSuppli analyst thinks both companies during 2009 have indeed staged good recoveries in their fortunes—and share prices—but this is move by Google such a disrupter, that it is difficult to see how these device vendors can add real value in the face of the launch of a free app. “No doubt the initial experience will be less rich compared to a dedicated device, but this will change. And it’s not as though Google will be overloaded with complaints about a free app”.

    According to Robinson, the question now is: Will the PND platform become a footnote in history—a one-hit-wonder?

    “Clearly the PND vendors would like us to think there is more in the locker, but it’s difficult to see the next steps for this dedicated device, particularly in the maturing markets of Europe and the United States,” he concludes.