Wireless phone handsets and consumer-related devices should drive the MEMS (micro electro-mechanical systems) accelerometer market to a compound annual growth rate (CAGR) in excess of 25 percent for several years.

“The MEMS accelerometer market will see strong, solid growth in the next five years, driven mainly by the technology’s great potential for user interface transformation across multiple industries,” says ABI Research’s Senior Analyst Douglas McEuen. He says he expects the market to show a CAGR of 27 percent to 2012.

The lion’s share of the growth – the big driver – will be the wireless handset market. “That market is massive to begin with,” McEuen explains. He notes that there will be worldwide sales of a billion handsets per quarter. “Even with average penetration, you’ll have huge growth,” he says.

A second substantial growth area will be consumer products, including game consoles, exercise devices, personal navigation devices, laptops and digital cameras. Growth here might be somewhat slower since the typical consumer is not turning over their game console or GPS on a regular basis.

McEuen points to the Nintendo Wii as the big showcase for the MEMS accelerometer market in the gaming arena.

The study purposefully left out industrial and automotive applications, such as sensors for air bags.

Being first in these market segments yields the greatest rewards, McEuen adds. However, he sees plenty of room for companies to make money even when the market is well past the bleeding edge. He says second-wave followers can expect substantial returns too: even a small part of a global market such as wireless handsets will produce very satisfactory revenue. The huge health and exercise market is another fertile and largely unexploited territory. Included here are things like the Nike+ and Apple venture to allow people to record exercise with a sensor in their Nike shoes talking to an iPod.

Some applications of MEMS accelerometers will have to wait for unit prices to fall, however. According to McEuen, true mass market traction will only begin when individual unit prices fall below a buck.

With MEMS accelerometers today priced in the $2 range for mass quantities, that time might not be so far off.

“MEMS accelerometers are a silicon technology,” says McEuen, “so prices fall as mass volumes are reached. They should break the $1 (US) barrier in 2010.”

He says the race from there will go to the person or enterprise which can be most creative with new applications for an old market.

ABI is located in Oyster Bay, NY and Scottsdale, AZ. Its website is www.abiresearch.com. The table of contents to the full study is at (http://www.abiresearch.com/products/market_research/MEMS_ Accelerometers) where it can be ordered.