2006: One in four will own a cell phone

The current cell phone cataclysm of slower sales, profit warnings and job cutbacks is only a bad dream on the way to 2006, a new study suggests.

Ben Charny Staff Writer, CNET News.com
Ben Charny
covers Net telephony and the cellular industry.
Ben Charny
3 min read
The current cell phone cataclysm of slower sales, profit warnings and job cutbacks is only a bad dream on the way to 2006, when one in every four people on the planet will own a cell phone, a new study suggests.

Market analyst Strategy Analytics believes the numbers could be even higher. SA Vice President David Kerr said his market forecast is "conservative."

The supposed 1.7 billion wireless subscribers by 2006 puts the analysts on quite a limb. It could either make the Boston, Mass.-based company a bigger seer than Joseph, who predicted seven years of drought followed by seven years of famine in ancient Egypt. Or, it could rank it up with other outlandish claims, like that of one analyst who claimed Qualcomm would trade at $1,000, or Nokia claiming it was going to sell a billion cell phones a year.

No other analysts have predictions on cell phone sales through 2006. But analysts from firms such as Gartner Dataquest said they aren't expecting the annual cell phone sales growth rate of 17 percent that would be needed to reach the 1.7 billion plateau.

Gartner's Bryan Prohm expects there will be 1 billion cell phones by 2003, with about 1.3 billion by 2005.

"They may be overshooting by a good bit," he said.

For handset makers, the future doesn't look too bright. Motorola has slashed thousands of jobs and is struggling to regain its footing. Ericsson warned that its first-quarter revenue would be lower than the forecast increase of 15 percent. Nokia, too, is expected to report less-than-stellar numbers.

Those same industry players aren't holding out much hope for 2001. A few months ago, handset makers expected nearly 600 million cell phones to fly off store shelves in 2001. Then Motorola said it expected global sales of fewer than 500 million. Siemens, the No. 4 handset maker, later pegged the global 2001 sales number at below 450 million.

The SA forecast depends on a shift in consumer buying patterns. By 2006, the disposable cell phone and the prepaid phone will have to dominate the market. The $150 handset generating a bill of $40 a month will be the relic.

"We'll have to step beyond the Nokia/Motorola mentality and go toward the 7-Eleven mentality," Kerr said.

Kerr isn't looking at some far-off shadow and calling it 1.7 billion cell phones. Cheap cell phones are already here. In Western Europe, prepaid phones sell for $50 and under, he said. In the Americas, that day may also be coming. AT&T has introduced a combination cell phone and $25 worth of airtime that sells for about $100.

But even cheaper phones are already in production.

On Tuesday, Telespree Communications unveiled a disposable phone it expects to sell for $30 or less through vending machines or at gas stations. The company said it has partnered with Cisco Systems and Nuance.

And New Jersey entrepreneur Randice-Lisa Altschul claims to be on the way to creating a cell phone made of paper that sells for less than $10.