I think the dynamics of handset upgrade cycle are a little different form the PC upgrade cycle. In most developed nations, handsets get replaced less than every two years. In some places, such as South Korea, Finland, and Japan, that number's very close to one year. The time frame's getting smaller and smaller, and this should continue for the forseeable future. Nokia's stated that nearly 50% of all its handset sales already come from replacement purchases, up from around 40% not too long ago. And this is in spite of the fact that most of these people are only getting standard "evolutionary" upgrade features such as voice dialing, an exapanded phone book, a smoother interface, musical ringing tones, etc.
Although handset ASPs are in the $150-$200 range, people tend to pay less than even that thanks to susbsidies. When compared to the ASP for a PC, you can see why people tend to need much less incentive to buy a new handset when compared to the incentive needed to buy a new PC.
This incentive should be provided by a combination of GPS and Bluetooth. I think location-based services could hold a lot of allure to a large number of existing subscribers. Although I think location-based m-commerce is a bit overhyped, location-based content services aren't. Just basic stuff such as directions, maps, traffic reports, weather, store listings, etc. Sure, people won't use these things everyday, but I can see millions of people that might want a phone that has such a feature.
Then there's Bluetooth. The allure of Bluetooth isn't the technology itself, but the software it'll compel handset manufacturers to put into their phones. What's the point of having that chip in there if all you can excahnge with other handsets, not to mention PCs and PDAs, is phone number lists? You'd want to make sure that you have decent PDA software, the kind of stuff that's standard on most Palms, PocketPCs, and Visors. You'd also want synchronization software, such as the type Puma makes. Once again, Moore's Law should make all of this possible.
I would agree with you that 70% annual volume growth (what the industry experienced in 1999) is most likely a thing of the past. However, an average of 40% or so growth for the next few years is quite possible, and revenue growth could be could be even higher thanks to potentially rising ASPs.
Eric |
