A shopping frenzy of handset upgrades and new 3G services in the final quarter of 2004 gave western European mobile firms a bumper year as mobile phone shipments reached 144 million units, newly published research has revealed.
According to IDC's latest market analysis, last year's sales represented year-on-year market growth of 19 per cent and this is predicted to continue with a 12 per cent increase in sales for 2005.
Co-ordination with the Christmas period for 3G launches from Vodafone and Orange increased the momentum of contract and handset renewals/upgrades, as the new services reinvigorated the consumer market.
3G service launches, and the subsequent increase in 3G handset development, saw explosive year-on-year growth of almost 850 per cent in the fourth quarter, driving the proportion of 3G handsets to six per cent in 2004 compared to one per cent in 2003.
IDC forecasts 3G handsets to increase to around 13 per cent of total mobile phone shipments in 2005, particularly in light of service launches from T-Mobile and O2 in the first quarter, and 3G handsets such as the 6680 from Nokia and Sony Ericsson's K600i.
However, GPRS is forecast to remain the dominant standard for the total mobile phone market, in contrast to GSM, which is expected to continue its decline in competition with a growing selection of low-cost GPRS-based, and increasingly Edge-based, handsets.
IDC also noted that, while the fourth quarter witnessed a significant increase in the number of available 3G devices, the Series 60 Nokia 6630 was the only smartphone-level device in operators' line-ups.
"The widescale absence of converged devices featuring WCDMA capability illustrates that 3G is yet to be considered compelling or even necessary for business/enterprise-level applications," said Andrew Brown, programme manager for European mobile devices at IDC.
"To date, there exist more smartphones featuring Wi-Fi than WCDMA, and we expect 3G handset development in 2005 to remain led by consumer-orientated devices rather than enterprise-level smartphones."
The report also noted that converged phone/PDA devices enjoyed growth of 40 per cent in 2004 compared to 18 per cent for standard mobile phones. However, IDC indicated that devices featuring evolved operating systems still only account for approximately four per cent of the total mobile phone market.
The analyst firm acknowledged announcements from Symbian, Nokia, Windows Mobile, and PalmSource to penetrate broader market segments, and the success of devices such as the Nokia 6630 and Orange SPV C500 in consumer segments as drivers of converged device growth in 2005.
Consequently, it forecasts growth approaching 70 per cent for such devices in 2005, increasing smartphones' total proportion of the market beyond six per cent.
Geoff Blaber, research analyst for European mobile devices at IDC, said: "In 2004 consumers were predominantly motivated by form factor and hardware.
"But as consumption of media content increases in 2005, users will increasingly demand a higher specification operating system and user interface with superior application capability in order to effectively download, manage and manipulate a range of media content.
"As long as feature phones continue to neglect the importance of software integration, this represents a significant opportunity for smartphones."
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