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New devices will drive steady growth of mobile data service revenues from EUR14billion in 2002 to EUR45billion in 2007

- Operators and vendors must co-ordinate device features with service availability, and target device feature sets at specific markets

- Handset subsidies are set to continue and operators looking to ODMs to drive down handset costs and provide differentiation

CAMBRIDGE, UK, November 19, 2002 By the end of 2003, millions of Western Europeans will be accessing mobile data services over GPRS networks from one of the new breed of feature-rich ‘smart’ phones now available, according to a new report published by Analysys, the global advisers on telecoms and new media

Sales of these new devices could stimulate demand in the mobile industry by reversing declining average revenue per user, renewing sales growth for operators and encouraging new equipment sales for vendors. The number of ‘feature’ phones in the market could reach over 278 million in five years.

The new study, Strategies for Mobile Device Evolution: meeting and creating market demand, states that by 2007, most of the features appearing on newly launched high-end handsets will be an integral part of a standard smart phone. These new features include colour screens, Java gaming capability,
digital cameras, picture messaging (MMS), digital music and polyphonic ringtones.

“With the introduction of new handsets like the Nokia 7650, the Sony Ericsson T68i and the Orange SPV (Sound Picture Video), we are finally seeing the kinds of devices that really enhance the desirability of non-voice services,” said Julie Robson, the report’s author. “These feature
phones will play a vital part in transforming the role of the mobile handset, from voice device to voice and data device, and will stimulate revenue growth for operators and equipment sales for vendors.”

According to Analysys, mobile data revenues in Western Europe are set to increase from around EUR14billion in 2002 (13.6% of mobile revenues) to EUR45billion (33% of mobile revenues) by 2007. New device features will be key to this growth as will network access speeds. Analysys anticipates that all new handsets will be GPRS- or UMTS-enabled by 2005. (Charts available to
journalists on request).

However, as the inclusion of many new features has implications for the cost, size, battery life and processing power of devices, the challenge for operators and equipment vendors in the short term, says Analysys, is to combine features in different ways according to the needs of particular user
groups and to ensure that device and service availability is co-ordinated.

“The primary concerns of business users will be to obtain fast, reliable wireless access to email, the Internet and corporate applications from PDAs and laptops,” added Robson. “While for the consumer market, factors such as fashion and design are as important as functionality.”

Despite their cost and draw on battery life, colour screens will quickly become a familiar feature of new handsets as they add a whole new dimension to mobile data services instantly enhancing branded content, games and downloads. Colour screens are also a ‘must’ for the Multimedia Messaging
Service (MMS), which is being heavily promoted by operators across Europe despite ongoing interoperability issues.

Surprisingly, operator handset subsidies look set to continue on even the higher specification feature phones, according to Analysys, as operators provide yet further incentive for users to upgrade and gain access to the new data services. For example, in the UK, the Ericsson T68 is being given away to free to T-Mobile contract customers. In addition, operators are increasingly looking to Asian ODMs (original design manufacturers) to drive down handset costs and provide differentiation.

“Several operators, including Orange and mm02, have signed exclusive handset deals with Taiwanese ODM HTC,” continued Robson. “This business model poses a major threat to the current dominant device vendors.”

Strategies for Mobile Device Evolution: meeting and creating market demand
provides an insight into how device features can be combined with services
to create winning mobile propositions. It also shows how wireless features
will be key additions to laptops and PDAs, and analyses the advanced
features which will enhance future mobile handsets.

The report is available to purchase online at Prices start from EUR1445. For more information, telephone Analysys on +44(0) 1223460600 or email

About Analysys

Analysys, the global advisers in telecoms, IT and new media, works at the forefront of the communications revolution, delivering advice and insight to established and new entrant players. From offices in Cambridge, London, Glasgow, Madrid, Milan, Paris, San Francisco and Washington DC, Analysys staff provide strategy and systems consultancy, information services and
start-up support to the companies that are creating the networked economy. Analysys Research reports and market intelligence services provide authoritative coverage of this convergent industry, based on an unrivalled ability to fuse real-world experience, rigorous research and forward-looking

Media contacts (for author photography, executive summaries and interviews)

Natalie Dargan

Analysys Research

Tel: +44 (0)1223 460600


Martin Brooke

Martin Brooke Associates

Tel: +44 (0)1223 264050


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