Market Watch

Revenue for the total mobile communications device market is expected to reach $335.6 billion by the time the year ends, up from $259.9 billion in 2010. This year’s growth exceeds the robust 19 percent expansion of 2010, and also will be higher than any future projected increase until at least 2015, when revenue is expected to cross the half-trillion-dollar threshold.

As the holiday season begins, it is clear that 3.5G and 4G devices like Apple Inc.’s iPhone and iPad tablet will continue to drive growth in the space, IHS believes. More important, the demand for data con­sumption generated and enabled by these and many other pieces of mobile communications equipment will have far-reaching effects on the total wireless ecosystem, driving everything from chipset innovations to infrastructure expansion and architectural upgrades.

With 44 percent of the market and revenue of $149.0 billion, the 3G handset sector remains the larg­est contributor in 2011 to the mobile communications device industry—a distinction it nabbed last year after wresting market dominance away from 1G and 2G handsets. But bragging rights for fastest growth this year belonged elsewhere—to the media tablet segment, soaring 217 percent to $36.5 billion from last year, and to 4G mobile handsets, up a no less remarkable 187 percent to $4.6 billion.

The 3G handset segment will continue to account for the largest share of mobile device revenue in the next few years, with revenue starting to decline in 2015. Meanwhile, the 4G standard known as Long Term Evolution (LTE) is set to dominate infrastructure spending among wireless carriers in the devel­oped world by 2013. Global carrier infrastructure spend on LTE will grow from $2.05 billion in 2010 to $36.4 billion in 2015, with the market favoring vendors that can deliver cost-effective, upgradable solu­tions with the high speeds called for by the next-generation wireless standard.

Key factors to success for players moving forward will be the ecosystem relationships developed out of mergers and acquisitions, as well as strategic partnerships. While the first three quarters of this year saw several highly publicized deals involving giant companies—exemplified by the partnership between Nokia and Microsoft, Google and Motorola, AT&T and T-Mobile—the soundness and effectiveness of such moves will be tested in the time to come. In particular, such acquisitions and partnerships will determine the growth potential of the partnered companies in the next three to four years, IHS predicts.

For the emerging regions of the world, strong subscriber growth is sure to continue, especially in the markets of China, India, South Asia and Africa. However, most of that growth will come from rural and new subscribers purchasing entry-level or very low-cost handsets, primarily to be used for voice com­munications. As such, handset manufacturers will need to have phones that meet both the low-end and high-end spectrum of the market in order to maximize growth potential.

All told, most segments of the mobile communications equipment market will post strong revenue this year, with declines occurring only in the older 1G and 2G handset sector, as well as in the market for wireless local area network client access. Other growth sectors in 2011, aside from media tablets and the 3G and 4G handset areas, are battery chargers for cellphones, handsets classified as belonging to the world’s underground illegal gray market, and several categories of mobile broadband and wireless access equipment like base stations, routers, mobile hotspots and USB dongles.

Also posting healthy growth in 2011 will be the semiconductor market for mobile communications, projected to reach $69.0 billion, up a solid 15.5 percent from $59.7 billion last year.

Learn More > Strategic Moves in Smartphones, Tablets and LTE to Face First Test in Holiday 2011