Increasing competition in the global mobile handheld device market is resulting in a constant decline in the average price per unit.

However, handset manufacturers can sustain revenues by targeting premium content and applications toward the youth market (age range of 13 to 25), since these early adopters are relatively less price sensitive when compared to other consumers.

High-end, state-of-the-art devices are typically the most profitable handsets and young population pools are most likely to be interested in the latest functions and services, says the analyst of this research service. Youth spending on ringtones currently represents the largest share of premium mobile product adoption with long-term growth expected to come from downloadable and interactive gaming concepts.

3G services are another area of opportunity for handset manufacturers to augment revenues and motivate users to upgrade handsets. In fact, the average life of equipment is expected to decline from 25-26 months to 16-18 months due to the adoption of 3G services and handset replacement. In addition, with the transition to 3G services, handset vendors must be ready to constantly upgrade devices to be compatible with a carrier’s next killer application. Again, perennial early adopters to new carrier services that typically maintain the shortest device lifespan should be the key target market for handset vendors.

As the average revenue per unit falls, handset manufacturers must turn to emerging markets to drive unit growth and increase customer base by a further 1.5 billion mobile users. In addition, mobile users in emerging nations are low-income consumers and therefore demand economical device options. These handsets are likely to be very popular and may even have a far stronger impact when compared to that of smartphones in the United States, Europe, and Industrialized Asia, observes the analyst. In fact, the global mobile device shipment stood at 795 million units in 2005, translating into an increase of more than 14 percent over 2004 with low-end phones being responsible for the lion's share of the growth.

In order to make the most of the opportunities offered by these developing nations, global handset vendors must develop relationships with regional carriers to reach local markets. This helps in maximizing revenues and understanding the new markets and needs of consumers. Another valuable strategy would be to develop joint-venture agreements with regional carriers to combat the challenges posed by the resale market and local participants.