Mobile handset market to decline 8% this year says IDC

After years of growth, the global market for mobile handsets will contract by about 8 percent this year although smartphones will remain a growth area, according to a new forecast from IDC.

The decline is worse than the 2 percent drop for this year that the company forecast in December 2008 and indicates further weakening in the handset market.

"Expectations for 2009 were negative going into the fourth quarter of 2008. However, worse-than-expected results and a steady flow of negative economic news are indicating that 2009 will be gloomier than predicted," said Ryan Reith, an analyst at IDC, in a statement. IDC is a subsidiary of International Data Group, the parent-company of IDG News Service.

"Concern is understandable during this time, but note that the mobile phone market still has plenty of room to grow on a global scale and we expect recovery will begin in the first half of 2010."

Last year global cell phone shipments grew 4 percent over 2007 with the strongest growth seen in smartphones, where shipments rose 22 percent. Shipments of conventional cell phones registered a rather weak 2 percent growth.

For this year, IDC expects global smartphone shipments to rise by just 3 percent and for the larger traditional mobile phone market to decline by 10 percent. In 2010 it currently sees demand returning with overall market growth of 9.5 percent on the back of a 22 percent jump in smartphone shipments and 7 percent rise in those of conventional mobile phones.

On a regional basis the slowdown will be worst in established cell phone markets such as Europe and the U.S., where traditional cell phone shipments are forecast to drop by a fifth this year and the overall market by 14 percent. The only bright spot in the U.S. market will be smartphone shipments, which are forecast to remain relatively strong with 8 percent growth.

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