The number of subscribers to GSM and 3G mobile networks has been rising rapidly in the last few years, which greatly boosted revenues of handset makers as well as network operators. However, as the number of subscribers increases, users demand more affordable phones ?both 3G and GSM ?which creates certain challenges for manufacturers.?

By mid-2005, the number of 3G subscribers (CDMA2000 1X EV-DO & WCDMA) exceeded 50 million, the high-tech market research firm In-Stat says. The rollout of 3G services has created pressure for carriers to earn cellular data revenue, and has spawned a multitude of cellular devices of every shape and size, and with almost every feature possible.

But with the trend towards more affordable phones, makers of handsets are facing pressure from each other. Particularly, a report from In-Stat has found the following:?

• Price pressures are accelerating. GSM handsets have hit the $30 level, and the push is on for $20. WCDMA handsets, most of which also support GSM, remain expensive, but prices are dropping fast.
• Chip counts are dropping. Although both Intel and TI have long talked about their visions for a ?one-chip?handset, now all chipmakers see the need to get handset chip counts down as fast as possible, especially for low-end handsets.
• Memory is growing greatly. Handsets are being made with larger and larger sections of flash memory, and some handsets have removable memory cards. Cellular carriers realize that subscribers won't buy songs and applications if they have no place to store them on their handsets.

?G networks have made 2005 an exciting time for subscribers and a trying time for handset and component makers,?says Allen Nogee, In-Stat analyst. ?Carriers have spent billions to get their data networks off the ground; they have become desperate to start getting some payback?

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