Yankee Group's 2001 best and worst wireless

BOSTON -- The Yankee Group has reviewed the most significant wireless and mobile technology events of 2001, concluding that it has been a difficult year and 2002 isn't looking much better. It's not all bad news, however, with the Yankee Group predicting that things will start to improve for the wireless industry by the latter part of 2002.

According to the Yankee Group, the most significant technology-related events of 2001 relate to the expansion and launch of next-generation networks around the world: cdma2000 and wideband CDMA in Asia; GPRS in Europe; and GPRS in North America. In 2002, operators will launch more networks. Verizon Wireless, Sprint PCS, and Leap Wireless recently started selling cdma2000-enabled wireless phones. 

"If the CDMA operators can succeed in providing exciting new applications and data services, they will place their GPRS-oriented competitors on the defensive," said David Berndt, director of the Yankee Group's Wireless/Mobile Technologies practice. "CDMA operators can leverage cdma2000's one-year lead time (with its Korean launch in 2000). On a major scale, Sprint PCS will officially launch the new technology in mid-2002."

Market pull-out

On the device front in 2001, Denso, Mitsubishi, and Philips pulled out of the North American wireless phone market, Berndt said. In addition, Ericsson and Sony combined their handset divisions. Berndt said he believes that "the wireless phone market has too many competitors, and that 2002 will witness more market exits or partnerships. We've also seen too many handset problems. In an effort to launch phones ahead of their competitors, quality control corners have been cut resulting in subsequent recalls."

Overall, wireless-oriented companies will have difficulty managing over the next 18 months. But everyone should recognize that things will be anything but boring. Those companies that can respond best to the needs of the market will be the survivors. 

Last week, the Yankee Group issued a report entitled "Mobile Handset Trends in the Asia-Pacific Region" with a revised forecast and analysis of major market trends for mobile handsets in the region. The report projects that the Asia-Pacific region will see strong handset sales growth in the coming years, buoyed by strong subscriber uptake and rapid migration to next-generation services.

The key findings and projections in the Report are as follows as of the end of 2005:

▪ Total handset shipments will rise from 162.3 million in 2001 to 296.2 million in 2005.

▪ With 3G taking a strong hold over regional markets by 2005, W-CDMA and cdma2000 1x-EV handset sales will dominate, with volumes of 129.3 million and 39.1 million, respectively.

While the Asia-Pacific region has already emerged as the largest cellular market in the world -- evidenced by strong subscriber growth, especially in China and now India -- the key driver for handset sales will be replacement sales, as subscribers rapidly upgrade their handsets to take advantage of next-generation services, according to the Yankee Group.

"The Asia-Pacific region's strong growth in cellular will extend to handset sales in the region as well. Given that GSM still dominates the Asia-Pacific landscape, it is crucial for its continued success that vendors like Nokia, Motorola, and Ericsson ease supply-side bottlenecks and ensure general availability of handsets for new GPRS and W-CDMA services," said Shiv Putcha, analyst with the Yankee Group's Wireless/Mobile Asia-Pacific research and consulting practice. "On the CDMA front, handset availability has been strong, but overall sales will be constrained by CDMA's second-place finish in the region to GSM and its migratory generics."

Founded in 1970, the Yankee Group employs 200 associates and maintains offices and research staff in North America, Europe, Middle East, Africa, Latin America and the Asia Pacific region.