IDC: Advanced handsets to sell slowly

Monday, October 6, 2003

Brazil's mobile operators are promising a boom in sales of mobile handsets with digital cameras and other expensive features in the run-up to Christmas, but a new report by consulting firm IDC suggests customers may not respond to the hype.

About 65% of the handsets cost less than 500 reais, "proving the national preference will continue at the level of cheaper models, as a consequence of the low purchasing power of the majority of the population," IDC said in a statement.

Some 10.5 million mobile handsets were sold in 2002, generating revenues of 4.5bn reais, IDC said in a statement, adding that this figure could rise to 14.6 million handset sales in 2007.

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Most Brazilians say they are happy with their existing phones, but those that do want to switch are looking for new multimedia services such as color screens, cameras and games at reasonable prices, IDC telecom projects manager Claudio Almeida said in the statement, adding that in 2004 the average lifetime of a handset will be 2.5 years.

Brazilian customers often opt for pre-paid plans, with about 72% of customers using this payment option at the end of 2002, and this figure is expected to rise to 74% by the end of 2003, he said.

Customers choose not to make calls from their handsets, "which is not surprising bearing in mind the high prices charged by operators, principally in pre-paid plans," he said.

"After all, demand in the national market for mobile telephony is elastic, with most consumers belonging to the classes with low purchasing power and a monthly spending on mobile services of less than 30 reais," IDC said.

The company said it interviewed more than 500 users, as well as handset suppliers and operators for the report, titled Brazil: Wireless Handset Market 2003.