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Ericsson Doubles 3G Phone Sales Outlook
By Jonas Dromberg at Bloomberg News
11 October 1999
Ericsson AB, the world's third-largest cellular phone maker, expects demand for next- generation phones to be more than twice its earlier estimate as operators adopt new technologies faster.
The Swedish company expects 120 million users before the end of 2004, up from 50 million in its earlier estimate. It also raised its forecast for the total number of cellular subscribers to 1.1 billion from 1 billion. Ericsson shares rose as much as 5 kronor, or 1.8%, to a six-week high of 279.50.
"Demand is much higher than we had expected and can meet right now and hopefully if this continues in the fourth quarter we can improve our margins," said President Kurt Hellstroem at a telecommunications fair in Geneva.
The next generation of phones will transfer data faster than current phones, allowing users to do video-conferencing and access the Internet. Although current technology is too slow to transfer moving images, Finnish rival Nokia Oyj recently put the first Internet phone on store shelves, marking the emergence of next-generation technology.
Yesterday, Nokia said it expects 60% of the phones in 2003 to be Internet phones based on the Wireless Application Protocol, or WAP, a technology that allows cellular phone users to see Internet content on their small screens. WAP is currently available on some products based on second-generation technology.
With operators upgrading their current networks to cope with higher speeds required for next-generation phones, users will get access to more sophisticated value-added services, such as securities trading or buying theater tickets.
In March, Finland was the first country to award licenses to operate the next-generation cellular phone system.
While Nokia sees 600 million WAP phones to be sold by 2003, Ericsson expects 400 million users to have mobile Internet access by 2004.
Copyright 1999, Bloomberg L.P. All Rights Reserved.
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