MPEG sees explosive growth in handsets and consumer electronics, says iSuppli

MPEG already has conquered the PC and consumer electronics worlds, with the video-compression technology integrated into 630 million devices shipped in 2006 alone. However, the technology is just getting warmed up, as the rise of the MPEG4 standard spurs its spread to handsets and expands its influence on the Internet, according to research firm iSuppli.

"MPEG's greatest opportunity will be found in the mobile-phone market, where consumers' desire for superior video quality has become a driving force for mobile-phone features and differentiation," said Rick Sizemore, who covers multimedia content and digital advertising at iSuppli. "With YouTube and other user-generated content sites serving as the distribution vehicle, and with content being generated spontaneously by mobile-phone users, the MPEG market is set to undergo accelerated growth in the coming years."

The number of MPEG4 (H.264/AVC/MPEG4 (Part 10)) codecs in handsets will rise to 509 million units by 2010, expanding at a whopping compound annual growth rate (CAGR) of 206% from a mere 1.9 million units in 2005, according to iSuppli. The total market for handset video codecs is set to grow to 1.9 billion units by 2010, rising at a 13.6% CAGR from 836.5 million units in 2005.

The handset market has become the "Swiss Army knife" of consumer electronics, integrating multiple features including PDA functionality, MP3 playback-and soon-streaming video. This video must be delivered via networks that have fairly limited bandwidth. This limitation will not be a problem for the bandwidth-stingy MPEG4, which is one of the reasons it is replacing MPEG2 in wireless-communications applications.

The growth of MPEG4 usage in handsets is fueling the overall expansion of the MPEG codec market worldwide, the research firm said.

MPEG video compression technology can be found almost everywhere in the home and in professional environments. Products employing MPEG technology include digital cameras, set-top boxes (STBs), digital televisions (DTVs), MP3 players, video-game consoles, DVD players and digital video recorders (DVRs). It is even used by YouTube.

The research firm predicts by the end of this decade, more than 160 million STBs and 40 million game consoles will ship annually-and these represent only two of the myriad of platforms in which MPEG is deployed.

"Digital still cameras, camcorders, set-top boxes and now high-end phones will drive the need for compression and decompression at a fevered rate," Sizemore said. "On top of that, with Apple on the verge of entering the mobile-phone market with the iPhone, personal media players/recorders could start appearing everywhere."

Source: iSuppli, compiled by DigiTimes.com, March 2007

Article translated by Rodney Chan and edited by Eric Mah