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By Jennigay Coetzer – Business Day – 12 November 2009

More than 25.5% of the world’s population is using the internet, the highest penetration being in regions with the highest broadband penetration. The largest number of internet users are in Asia with 738 million, and Europe with 418 million, compared to the lowest usage regions being Africa with 67,372 million and Middle East with 48 million, as at 30 September 2009, according to Internet World Stats.

The International Telecommunications Union (ITU) says Global fixed line broadband subscriber numbers are expected to reach 500 million this year and mobile broadband subscriptions to top 600 million. It says the rapid internet growth experienced in the developed world contrasts starkly with what is happening in developing markets.

For example, in Africa there is only one fixed broadband subscriber for every 1,000 inhabitants, compared with Europe where there are some 200 subscribers per 1,000 people. This low penetration is due to the high price of broadband services and low income levels.

The ITU says China has the world’s largest fixed broadband market, overtaking its closest rival, the US, at the end of last year. The increasing number of mobile phones that have internet capabilities, the cost of these devices coming down, and the growth in mobile broadband coverage in emerging markets all bode well for future widespread online connectivity.

The Global mobile Suppliers Association (GSA) says 3G/HSPA mobile broadband services are now commercially available from 283 operator networks in 119 countries and most of these are capable of peak download speeds of 7.2 megabits per second or higher. PotioResearch says total mobile subscribers are expected to reach 6 billion by the end of 2013, with phone handset sales increasing accordingly.

In its Low Cost Handsets Report, Juniper research predicts that low-cost handsets at the one end of the market and smartphones at the other will together account for almost 79% of all new mobile phones by 2014, or just over 1 billion units in total. This leaves mid-range phone offerings being squeezed in the middle.

Juniper Research’s senior Analyst Andrew Kitson says about 80% of new mobile users are expected to come from emerging markets over the next six years. He says operators and handset suppliers must work together to lower the price barriers of mobile technology and develop social and personal services.

Africa and the Middle East will account for the largest annual shipment volumes by 2014, with 166 million low-cost handsets representing 24% of all sales that year. The take-up in emerging markets will be boosted by the availability of low-cost, highly targeted localised information services, says Kitson.

A new study from ABI Research says in 2007 only 18% of smartphones on offer cost under $200 retail, but this figure has increased to 27% this year and will grow to 45% by 2014. Mobile devices practice director Kevin Burden says where most consumers used to choose phone handsets based on the physical characteristics of the hardware they are focusing more on the operating system and software.

The ABI study says manufacturers now want to offer a mix of high-priced, high-margin models, and moderately priced smartphones that can generate high volumes of sales. It says the greatest increase in smartphone volume sales over the next five years will be in the $100 to $200 price range.

“We may never see a $30 smartphone, but over time, smartphones will take a substantial part of the mainstream handset market,” says Burden. Gartner predicts worldwide smartphone sales will grow by 29% a year to reach 180 million units this year, overtaking laptop sales in number of units.

Currently, smartphones account for 14% of overall mobile handset sales, but this figure is expected to increase to 37% by 2012. As the functionality of smartphones and PCs converge, an increasing number of PC manufacturers will move into this market, although they will face tough challenges, says Roberta Cozza, principal research analyst at Gartner.

These include having to adapt to very different market conditions, with products that are largely based on short life cycles, fashion design and diverse operating systems. The firm says it expects all major PC suppliers to have announced their intention to have a presence in the smartphone market by the end of this year.

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