SOURCE: The Freedonia Group
World Products Forecast Update
February 2006
INFORMATION TECHNOLOGY
China's Mobile Phone Subscribers Reach Almost 400 Million
China's Ministry of Information Industry has officially announced communication services related statistics as of the end of 2005. According to the statistics, the number of mobile phone service subscribers is 393,428 million, 58,604 million more compared to the previous year. It indicates that subscriber numbers continued to grow at a fast rate of about 3 million per month. The number of subscribers to mobile phone packet communication services, including GPRS, is 71,011 million. These subscribers increased to 44,937 million, more than double the number a year earlier.
Meanwhile, the number of Internet users is 111 million. Fixed broadband service users expanded to 12,629 million households from the preceding year and reached 37,504 million. Of the 37,504 million households, DSL service subscribers account for 26,359 million and wireless LAN and relevant service subscribers constitute 34,000.
Tetsuo Nozawa, Nikkei Electronics
*****
Microsoft Unveils Mobile Software to Rival BlackBerry
Microsoft Corp., the world's largest software maker, unveiled mobile phones with new e-mail features that will compete directly with Research In Motion Ltd.'s BlackBerry devices.
Motorola Inc., the No. 2 mobile-phone maker, and Hewlett- Packard Co. are among those making phones with upgraded Microsoft e-mail technology. Service providers such as Vodafone Group Plc and T-Mobile International AG will add the phones to their lineups.
The new features for Windows Mobile 5.0 may enable Microsoft to catch up with Research In Motion and Symbian Ltd. in the market for phones that double as an organizer. The number of phones running Microsoft software may double to 10 million in the year ending June 30, Senior Vice President Pieter Knook said. Many customers haven't heard of Microsoft's mobile software, Knook said.
As the phones go on sale, Redmond, Washington-based Microsoft will begin a print and outdoor advertising campaign, Knook said. Ads will run in Germany, France, Spain, the U.K. and U.S. and will appear mainly in airports to attract business travelers.
Business Customers
The software will let companies that use Microsoft's newest Exchange e-mail software deploy Windows-based mobile phones in the same way as BlackBerrys for a lower price, Knook said. Exchange has about 130 million users and within a few months; about 40 percent will have the latest service pack, he said.
The new e-mail software pushes messages from a corporate server out to the phones, replacing an older Microsoft e-mail technology for phones that was slower to deliver messages. The new software mimics the speedy delivery of the BlackBerry without requiring the additional costly software and service fees associated with BlackBerrys, Knook said.
The devices will probably only appeal to business customers, said Kevin Burden, an analyst at Framingham, Massachusetts-based IDC. That plays to Microsoft's strength in business software, he said. At the same time, it means the market for such phones is smaller than analysts think, he said.
IDC estimates that of 823 million phones sold last year, about 56 million were smart phones with more complex software.
Microsoft runs about five percent of the smart phones, compared with more than 60 percent for Symbian. Nokia Oyj, the world's largest mobile-phone maker and a part owner of Symbian, puts the software in many phones without charging extra and without marketing the programs to the customer, Burden said.
Newbury, England-based Vodafone today said it will offer a range of devices running Windows Mobile 5.0 with the new e-mail features to business customers in Britain, France and Germany in March. The service will begin in other European countries later in 2006.
Carriers including Atlanta-based Cingular Wireless LLC, France's Orange SA, Sprint Nextel Corp., T-Mobile and Chunghwa Telecom Co. will also sell new devices with the e-mail features or will give free updates of the software to customers who own devices with Windows Mobile 5.0.
It will take more than a year for Microsoft to gain as many customers as Research In Motion, Knook said, while declining to provide a precise forecast. Research In Motion had more than 4.3 million subscribers as of its latest quarter.
Microsoft also said Amoi Electronics Co., HTC Corp. and Sagem Communication are building smart phones based on a less expensive Texas Instruments Inc. chipset, which will lower the cost. The handsets will be available within a year. Current smart phones cost a few hundred dollars even with operator subsidies.
Dina Bass, Bloomberg
CONSUMER GOODS
January Game Sales Down Five Percent
While 2005 was a record-setting year, the last four months saw software sales decline. That trend has continued in January, as game sales fell by five percent year-over-year and 78 percent sequentially from December. Some analysts are blaming the Xbox 360 shortages for this.
It appears the industry is continuing right where it left off in 2005, as software sales in January were once again down year-over-year. Total U.S. console software sales for January came in at $357 million, down five percent from last January and marking the fifth consecutive month of decline.
While current-generation software sales were down $109 million, next-generation sales were up by only $93 million, not enough to offset the decline. Unit sales were also down 11 percent, but the drop in units was partially offset by a six percent rise in average selling prices.
Wedbush Morgan Securities (WMS) analyst Michael Pachter believes the Xbox 360 shortages are playing a major role in perpetuating the market weakness. "As expected, we saw continued weakness in current generation software sales (-30% in sales and -25% in units), but we were surprised by the relative weakness of next generation software sales (Xbox 360, PSP and DS), which were up only $93 million compared to our up $115 million forecast," he said.
"Part of the shortfall was attributable to our expectation that Microsoft would ship an increasing number of Xbox 360 hardware units in January, when in fact, the company shipped approximately 50,000 fewer than the prior month. Compounding the low hardware sell-through problem was a decline in the attach rate for Xbox 360 software (2.6 units of software for each hardware unit sold in January, down from 4.3 last month)."
NPD data shows that Microsoft (MS) was able to sell about 850,000 Xbox 360 units through January, which is in contrast to internal MS data that says they shipped 900,000 in North America. Even though MS recently added a third manufacturing plant (Celestica), WMS is not optimistic about supply & demand being balanced anytime soon.
“Microsoft is scheduled to launch the Xbox 360 in Australia, New Zealand and several other countries in March. We think that much of the new supply will be diverted to these markets, and envision that U.S. supply may moderate around 300,000 units per month.
“We consider this to be a problem. Should Microsoft continue to sell only 300,000 Xbox 360 hardware units, we think it is possible (even likely) that software attach rates during the spring and summer months will be around three units per box, meaning that Xbox 360 software sales will only contribute $50 - 60 million per month. At the same time, we expect current generation software sales to continue to trend at a -30% rate, down around $100 million per month for each of the next several months," WMS explained.
While January game sales were down five percent, WMS anticipates things to get worse before they start to get better. "We believe that January sales may have been even worse had Microsoft continued its marketing push, and believe that sell through was helped in part by deep discounting of new releases during the month. January marked the fifth consecutive month of software sales decline, and we expect a return to double-digit sales declines in February, with an accelerating rate of decline in March," Pachter said.
James Brightman, gamedaily.com
MATERIALS
US Nonwovens Demand To Exceed $5 Billion In 2009
Demand for nonwoven roll goods is projected to increase 4.0 percent per year to $5.1 billion in 2009, driven by healthy gains in key markets such as filtration, construction, wipes and electronics. Further growth will derive from increased market penetration in many applications, including industrial wipes and roofing membranes, as new technologies improve the functionality of nonwoven materials. However, gains will be limited by intense price competition in many consumer markets, as converted product manufacturers seek to cut costs by reducing the amount of material in their products and using less expensive nonwovens. These and other trends are presented in Nonwovens, a new study from The Freedonia Group, Inc., a Cleveland-based industrial market research firm.
Spunbonded nonwovens will remain the dominant product, accounting for nearly half of total volume in 2009, owing to their position as the material of choice in several major markets such as baby diapers. However, air laid nonwovens will post the fastest growth in both volume and value, fueled by increased use in wipes and hygiene products, as well as higher prices compared to the 1999 to 2004 period. Although carded and wet laid nonwovens are expected to see the slowest gains, certain segments of these product types will have more favorable prospects.
Among disposables markets, consumer products will continue to account for the largest portion of nonwovens sales, though growth will be restricted by below average advances in baby diaper and feminine hygiene markets. Nondisposables, which comprised over 35 percent of nonwovens sales in 2004, will grow at a slower pace than disposables. However, the largest nondisposable markets, construction and electronics, will post above-average gains, fueled by robust growth in nonresidential construction and solid increases in battery production.
Polypropylene and polyester were the most widely used fiber materials in 2004, accounting for over three-quarters of fiber consumption in nonwovens, in the form of both staple fibers and filament fibers produced by the spunbonded and meltblown processes. Demand for cotton fibers will see the fastest growth, benefitting from consumer preference for natural fibers in nonwoven products. Consumption of fibers made with rayon (or viscose) fibers will post the slowest growth through 2009, as these fibers are increasingly replaced by polypropylene and polyester.
SOURCE: The Freedonia Group
TextileWeb
CONSTRUCTION
The economic environment for U.S. construction remains strong in 2006. Nonresidential construction activity increased 2-3% after inflation in 2005, with much larger gains expected during the next few years.
Post-hurricane repairs and replacements in the Gulf of Mexico region account for 0.3% of 2006 construction spending. Most of the cleanup and temporary repairs and much of the private infrastructure, utility, and manufacturing replacement was completed late in 2005. Rebuilding could be substantially higher in 2006. However, a large share of the destroyed homes and nonresidential buildings in the New Orleans area can be expected to be replaced by vacant buildings in Baton Rouge, Houston, and other nearby cities.
Commercial/ Institutional
Airports
The $60 billion aviation bill Congress passed in 2003 continues to fund aviation projects; $3.6 billion is allocated for 2006 and another $3.7 billion will come in 2007, in spite of airline financial difficulties.
Lodging
The outlook for lodging is positive, with estimates showing construction could increase 12.7%. The majority of the work in 2004 and 2005 consisted of upgrades and modernization, so 2006 is likely to be the year of new construction.
Manufacturing
The manufacturing sector, which had a banner year in 2005, is expected to level off some in 2006, but the market outlook remains bright. The leveling off is natural; the market bottomed out in 2002 and showed little growth through 2004, so 2005 showed tremendous growth because the market had nowhere to go but up.
Office
The office sector, buoyed by sustained employment growth, is poised for moderate growth in 2006. Projections indicate 43.2 million square feet of new office space over the year, up slightly from 2005, and office starts are projected to total 167 million square feet. Washington, New York, and Los Angeles will again have the most new office space under construction in 2006.
Retail
The retail sector is expected to continue growing, but the outlook is cautious. Specialty retailers and big-box retailers, however, are planning significant growth.
Design and construction firms see the overall education market as one of the biggest and brightest markets. The market overall will continue to grow because of steadily increasing student populations and continued access to funding. Education starts in 2006 are expected to see a six percent increase over 2005, which equates to 225 million square feet.
The K-12 market continues to grow, but at a slower pace than higher education. Spending is expected to rise slightly, from $29.4 billion in 2005 to $30.7 billion in 2006.
Colleges and universities are absorbing great numbers of students and will continue to do so for years; the graduating high school class of 2009 will be the biggest in U.S. history. Between 2005 and 2007, the higher education sector will complete $42 billion in projects; $29 billion in new construction, $8 billion in modernizations, and $5 billion in expansions. Projects of greatest importance: residence halls.
Healthcare could be 2006's hottest market. Hospital starts are predicted to increase 21% while nursing homes and clinics are expected to increase 6%. In all, 107 million square feet are expected to be put in place in 2006. One possible snag: rising interest rates that could squelch future funding.
Overall, the market has been flat and is not expected to show much growth. Only three new Federal prisons are slated for construction in 2006, and overall, detention facility projects are expected to decline 18%. Courthouses are in the second year of a two-year moratorium on planning, budgeting, and authorizing. Police and fire stations are expected to increase in 2006, possibly by 18%, but still well below levels in recent years.
Building Design and Construction
Housing
U.S.
Residential construction starts in 2005 rose 5.6 percent to 2.065 million units—the second-highest level on record. The record came in 1972, when starts hit 2.357 million units. Permits in 2005 also logged their second-highest level since 1972.
Building Design and Construction reports residential housing starts are expected to slip about 12% from February 2005 to spring 2007. In 2006, expect multifamily to post modest gains, possibly a 4% increase in housing starts.
Builder’s Housing Market Forecast shows a map of the United States with the 75 largest housing markets, as measured by the number of permits issued during the 12-month period from October 2004 to September 2005 for each 1,000 in population. The markets are color coded to indicate their market hotness. Market hotness takes into consideration the size of the market as well as the number of permits issued, so it helps to identify the markets that are growing faster relative to their size.
The hottest markets are still concentrated in Florida and other Southern states, and in parts of the West. Some cooling is occurring in Texas and the Rocky Mountain states.
The Demand/Supply Matrix reveals how balanced a market is in terms of job growth versus permits issued. Job growth is a strong indicator for new-housing demand, and permit issuance relates to the supply of new housing. Analyze the demand/supply balance in your marketplace. Although nothing takes the place of specific market knowledge and in-depth market research, here are some rules of thumb for strategies in these market types:
Builder, Jan 2006
CANADA
Canada's home-building industry will slow 7 1/2 percent this year and 6 1/2 percent in 2007, Canada Mortgage and Housing Corp. (CMHC) said.
The federal Crown Corporation said housing starts this year are expected to total 208,700 units, down from 225,481 in 2005. Starts in 2007 are forecast to decline to 194,800, ending five consecutive years above 200,000.
In 2006, CMHC said Alberta's vibrant job market will continue to be a magnet for workers from other parts of Canada, and the population growth will help keep total housing starts strong at 39,500 units, falling slightly to 37,500 units in 2007.
British Columbia's new-home construction will retain high historical standards, thanks to growth in incomes and high levels of consumer confidence, CMHC added. Those factors will be partly offset rising construction costs and interest rates, but 32,600 units should be started this year.
Manitoba is the only province that can expect rising sales of existing homes and rising construction for both this year and next, while Quebec's sluggish economy will put a damper on its housing market, with starts forecast at 43,000 this year and 38,500 next.
JAPAN
Japan's
housing starts rose for the third straight year in 2005 to 1,236,122 units, up
four percent the Ministry of Land, Infrastructure and Transport said.
The total eclipsed 1.2 million for the first time in five years. "This mirrors
Japan's economic rebound," a ministry official said.
Starts on homes for rent increased for the fifth consecutive year to 504,191
units, up 8.4 percent over the previous year, while starts on owner-occupied
homes shrank 4.5 percent to 353,282 units, according to the ministry.
Starts on homes for sale such as condominiums totaled 369,103 units, up 6.8
percent for the third straight yearly rise, led by a 12.4 percent condo sales
jump to 229,395 units. The condo figure marked the second straight year of
growth.
But starts on single-family homes turned back for the first time in three years,
falling by 1.0 percent to 137,829 units.
By region, starts grew 2.4 percent in the Tokyo metropolitan area, 8.9 percent
in the central Japan region of Chubu, 4.3 percent in the Kinki region around
Osaka, Kobe and Kyoto, and 3.9 percent in areas other than these three regions.
In December alone, housing starts came to 97,932 units, down 0.9 percent for the
first year-on-year drop in three months, due to falls in starts on
owner-occupied homes and those for sale, the ministry said.
Starts on condos fell 2.7 percent in the first fall in eight months after the
condo market took a blow from the news that former certified first-class
architect Hidetsugu Aneha had fabricated data on the structural strength of
condos and hotels against earthquakes.