The state of the industry is strong, despite this year’s travails, reports IDC: Wireless network infrastructure, mobile devices, M2M to be affected by downturn

Despite the disastrous ramifications the global economic crisis has had on other business sectors, a new report from research firm IDC predicts the global mobile industry will remain relatively unscathed – and could even benefit.
The wireless industry has become the dominant driver of the global telecommunications industry and serves almost half of the world’s population, according to the report led by IDC analyst Shiv Bakhshi.
At the end of 2008, there were 3.6 billion wireless subscriptions in the $700 billion mobile industry, but by 2012, those numbers are expected to grow to $855 billion among 4.9 billion subscriptions, according to the study.
“Because mobile is a critical infrastructure of the world, it is going to fare in this downturn a little better,” Bakhshi said. “There is going to be a minor impediment on the road to continued growth.”
However, certain segments of the market will suffer more than others, and the rollout of wireless technologies in developed countries will follow a different trajectory than growth in developing markets, according to the study.
Nonetheless, the industry will likely experience a lag in sales for network infrastructure, mobile devices, chipsets and software.
Network spending
For network infrastructure, the market is forecast to decline to $50.7 billion this year compared with $51.2 billion in 2008, according to the study. In the next four years, spending will hover around the $50 billion mark.
Spending “will remain constant because there is a need to continue to invest in networks,” Bakhshi said.
Bright points include the development of 3G networks in China and India. China recently issued 3G licenses and India is on the verge of allocating spectrum for 3G.
And LTE will figure prominently in the equation as Verizon Wireless in the U.S. and NTT DoCoMo in Japan look toward aggressive rollout schedules. Indeed, Verizon Wireless recently announced its LTE vendors (Alcatel-Lucent and L.M. Ericsson) and plans to launch commercial LTE service in 2010.
Bakhshi said other wireless providers will take a wait-and-see approach with LTE before investing in the 4G technology. Carriers with HSPA networks may exhaust all the software upgrades before tackling LTE.
WiMAX for emerging markets
With developed countries investing in 3G and 4G networks, WiMAX will be a strong player in developing countries. According to the study, WiMAX will come of age this year and will be popular in emerging markets such as India, where Internet access is hobbled by lack of wireline broadband infrastructure. In developed markets, WiMAX will be viable in rural areas that don’t have broadband access or are underserved.
“These are two technologies that serve different functions,” Bakhshi said of LTE and WiMAX. “These are not competing technologies. Anyone who says so is overstating the case. People should give it up.”
“In developed markets, WiMAX faces challenges because there is other competing broadband technology in place,” he said. “In developing countries, there are no competing technologies.”
Bakhshi called WiMAX a niche technology that will serve certain segments of the market. According to the study, WiMAX will gain some traction in the U.S. as Clearwire Corp. “regroups to take clear control of the Xohm initiative and refocuses itself on building out its network.”
Sprint Nextel Corp. launched Xohm late last year in Baltimore; through its new joint partnership with Sprint Nextel, Clearwire has re-branded the WiMAX offering as “Clear” and has expanded it to Portland.
Handset projections
Handsets sales will also struggle this year because of the current economic climate, according to the study. Shipments of 1.2 billion are expected this year, which would be a 9% decrease from 2008 when 1.22 billion handsets were shipped.
“People will wait longer to replace their phones,” Bakhshi said.
The study forecasts that the handset market will recover in 2010 with 1.29 billion shipments and grow to 1.4 billion by 2012.
The mobile industry could also benefit in the downturn as enterprises invest in wireless technology to cut costs and improve efficiency in operations and employee productivity. Bakhshi said machine-to-machine technology stands to gain because of the economic downturn.
“More things will get tied to the network,” he said. “Mobile infrastructure will become more useful to these industries as they try to cut costs.”