Ultra Low-Cost Handsets (ULCH) continues to be in high demand, driven by the unstoppable subscriber growth in the emerging market. But this growth is fleeting, says IHS iSuppli, a market research firm.
While estimated shipment volumes are expected to reach 191 million units in 2011, with an impressive growth rate of 22.1 percent over shipments in 2010, ULCH shipments will reach its peak in 2012 with 207 million units as first-time buyers contribute 17.8 percent of the total volume.
However, ULCHs could see a reprieve coming from the gray market. In 2011, gray market handsets are competing directly with ULCHs. But we believe that the gray market will begin to decline in 2012 and consumers will start to upgrade with branded ULCHs in the beginning of the replacement cycle.
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Beginning in 2013, shipments of ULCH will begin to decline until they fall to 175 million units by 2015, managing a compound annual growth rate (CAGR) of 2.3 percent through the forecast period.
By comparison, the smartphone segment is expected to continue to grow heartedly in the next few years reaching a 54.4 percent share of the overall mobile handset shipment volume with 1.03 billion units.