Mobile Handset Upgrades To Double First-Time Sales In 2007

EL SEGUNDO, CA—Upgrade purchases of wireless handsets will more than double the level of first-time buys in 2007, an unprecedented event in the market, according to a report from iSuppli Corp's Tina Teng.

After rising by 38.1 percent in 2005, first-time mobile-phone sales will drop by 33.2 percent in 2007, iSuppli predicts. Meanwhile, upgrade sales—i.e., purchases of phones by consumers who already own a handset—will rise by 56.7 percent in 2007, compared to a 23.9-percent increase in 2006.

Because of this, upgrade handset sales will amount to 712 million units in 2007 (see table), more than twice the 342 million first-time sales for the year. This will mark the initial time that upgrade sales are double the level of first-time sales during a year.

The shift to upgrade sales will continue in the coming years, with first-time sales set to decline to 201 million units by 2010, decreasing at a Compound Annual Growth Rate (CAGR) of negative 15 percent from 453 million units in 2005. Meanwhile, upgrade handset sales will increase, rising to more than 1 billion units by 2010, which represents a CAGR of 22.6 percent from 367 million units in 2005.

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