Reuters: Cell Phone Market Seen Soaring in '05

Cell Phone Market Seen Soaring in '05
Tue Jan 18, 2005 11:54 AM ET

LONDON (Reuters) - The global mobile phone market is set to grow to 2 billion subscribers by the end of 2005, fueled by strong demand from developing economies in Asia and Latin America, Deloitte & Touche said on Tuesday.

The consulting firm said it expected voice calls to continue to be the primary driver of profits and revenues for mobile phone companies, with volumes continuing to grow steadily on the back of falling prices and rising ease of use.

Mobile penetration would surpass 100 percent in some markets as users take a second connection for data or for personal use. The mobile industry had 1.5 billion users in June last year.

"The most compelling and lucrative mobile content will continue to revolve around phone personalization, such as ring tones, real tones, wallpapers and basic games," Deloitte said in its 2005 outlook for the telecoms sector.

Traditional fixed-line operators will continue to face margin pressures because of competition from mobile and voice over Internet protocol (VoIP) providers, but the vast majority of voice calls would still originate and end on their networks, the report said.

"They should focus on marketing their superior capabilities and investing in full-featured phones with key convenience features, such as stored number dialing, text messaging and conference calling, to stimulate call volume," Deloitte said.

RADIO TAGGING

Radio tagging could become the sunrise industry this year, Deloitte said, as sectors ranging from retailing to automobiles drive up adoption of the technology to curtail theft, cut waste and improve productivity.

"In 2005, Radio Frequency Identification (RFID) will finally make it out of the lab and into the commercial world ... By the end of the year, more than 10 billion RFID tags will have been sold and used," Deloitte said in its 2005 outlook for the telecoms sector.

Retail giants such as Wal-Mart and Britain's Tesco are in the midst of a drive to replace bar codes with RFID chips embedded in plastic product tags that can track goods and signal the need for restocking, boosting supply efficiency and cutting costs.

Analysts estimate this technology and subsequent cuts in manpower, with inventory control done automatically, could save Wal-Mart, which posts annual sales of about $256 billion, more than $1.3 billion a year.

Deloitte said it expected collecting, collating and presenting RFID data will become a very sizeable industry, with technology companies grabbing the lion's share of revenue.

RFID readers and other hardware could become a healthy market, and RFID applications will find use in sectors ranging from healthcare to construction and transportation, it said.