The economic downturn has hit handset replacement volumes hard, reducing sales to single digit growth for the first time since 2001. At the same time, competition has intensified throughout the handset value chain as players at every stage strive to increase value for their customers and the end user.

“Intense competition is forcing many vendors and operators to drastically change their business models or risk dropping out of the market as economies of scale, brand power and distribution become key metrics to determine success…” David McQueen, author of the Future Mobile Handsets report

Yet the outlook is not altogether gloomy. The handset market maintains its significant size, with over one billion units sold annually, and sales growth in the $127bn space continues, albeit at a lower rate.

In order to survive the global recession, handset manufacturers have had to scale back the size of their portfolios and look at ways to differentiate their products and cut costs. From production, marketing and sales, to a greater emphasis on design capabilities, software and cost, there are a whole range of activities that require a different strategy and more resources to sustain growth.

In this interview with Informa Telecoms &Media principal analyst David McQueen, Mike Hibberd, editorial director of MCI and telecoms.com, addresses the important developments directly related to increasing competitive pressures in the handset market and looks at the findings of the 11th edition of the Future Mobile Handsets report.