According to research firm The Yankee Group handset growth in Latin America is predicted to slow to 16 percent from 2004 to 2006.
Although this lower percentage applies to a much higher base, sales due to growth will fall from an average of more than 20 million units per year to less than 16 million units, according to the Yankee Group report, Operators and Vendors Must Partner to Drive Featured Phones.
"Growth in subscribers, which has driven handset sales up to now, will lose force in the coming years as major markets like Brazil and Mexico approach saturation," says Wally Swain, Yankee Group Wireless/Mobile Latin America principal analyst. "Churn will become the primary driver of sales in the medium term, although many churning customers will bring their own handsets, and not all sales by operators will represent new handset sales for handset vendors like Nokia, Motorola, or Samsung. Replacement is the next important wave, and this will represent important sales of new handsets for vendors."
Latin Americans are less inclined to replace their handsets; however, recent research by the Yankee Group in Brazil shows that Latin American consumers are not significantly different from their counterparts in other regions in their desire to have the newest handsets. What is different is that Latin Americans will not pay much more than they are currently paying for a low-end prepaid handset, which is between U.S. $100 and $150. Most operators charge full price for replacements, so consumers would rather keep their old phone or churn to another operator to take advantage of subsidized offers.
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