Mobile Phone Sales Predicted to Slow-Down

The sale figures for Apple’s new iPhone is taking most of the headlines this week, but a worldwide economic slump may impact global cell phone growth. According to research firm Gartner, 1.15 billion handsets were sold in 2007. A 16% increase over 2006’s numbers. But this year, growth is predicted to slow.

In May of this year, Gartner forecast that global sales would increase by 10-15 percent but has adjusted these numbers down to 10-11 percent because of new economic realities. Much of the predicted growth will take place in emerging markets, which are just beginning to feel the economic squeeze that has hit developed countries.

As long as a global depression is fended off, sales should increase about 10% this year, which sounds good. But much of this growth will be in the low-end market, with increased sales of cheap models. The profit margins for these phones are lower than for the high-end models, so manufactures depend on volume to make up for lower profits for each sale. A loss of predicted future profits can adversely impact the stock price of mobile phone manufactures.

Gartner