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Friday July 31, 2009
Smartphone Growth Encouraging, Mobile Phone Market Expected To Shrink in 2009
FRAMINGHAM, Mass. July 30, 2009 – The worldwide mobile phone market recorded another quarter of year-over-year decline in the second quarter of 2009 (2Q09). According to IDC's Worldwide Quarterly Mobile Phone Tracker, handset vendors shipped a total of 269.6 million units worldwide, down 10.8% from 302.2 million units in 2Q08. The second quarter results are an improvement from the 17.2% decrease seen during 1Q09, but ongoing challenges stemming from the economic crisis remain a factor to watch.
"The challenges from the previous nine months – aggressive channel destocking, foreign exchange volatility, and uncertain demand – continued to plague the mobile phone market in the second quarter, but were not as severe as before," says Ramon Llamas, senior research analyst with IDC's Mobile Devices Technology and Trends team. "Those vendors who were able to adjust quickly were rewarded with greater shipment volumes. Although this tested the handset vendors' abilities to hit a moving target, customers reaped the benefits of lower-costs, even on key high-end devices."
For the full year, IDC believes that the market will decline 13%, with the market outlook for 2009 remaining relatively consistent among the top vendors. The small signs of improvement were centered around consumer demand for high-end handsets and the manufacturers' ability to shift portfolio to meet these needs.
"Among the big handset vendors, Nokia, Samsung, Research In Motion, and Apple, all beat expectations for smartphones within the second quarter," said Ryan Reith, senior research analyst with IDC's Worldwide Quarterly Mobile Phone Tracker. "This demand for high-end mobile phones has created a price war among large mobile operators and handset vendors. Apple's price cut on the iPhone 3G reflects a trend we expect to continue in the upcoming quarters, and one that will effectively maintain competitive pricing within mature markets."
Regional
Analysis
- Amidst the ongoing economic
challenges in North America, the market for converged mobile
devices thrived with the arrival of the Palm Pre and the iPhone 3G S
towards the end of the quarter. Shipment volumes for other converged
mobile device vendors also benefited from increased attention and price
adjustments on the segment, pushing the market even higher. At the same
time, interest in prepaid devices remained strong for budget-conscious
customers. Finally, the market for mid-tier and high-end devices began to
show signs of improvement with the arrival of new devices from leading
vendors.
- Despite the expected decrease in volume from last
year in Latin America, the second quarter of 2009 was stronger than
expected, showing solid sequential growth from the doldrums that were seen
in 1Q09. Local currencies in the key markets of Brazil and Mexico
experienced revaluation from the precipitous drops that occurred in the
prior six months, helping to alleviate some of the economic pain being
felt by many businesses and consumers. Interest in 3G services and
offerings have been expanding in the region, helping carriers to increase,
or at a minimum sustain, ARPUs that have been falling over time.
- Results in Western Europe continue to
reflect weaker demand from the previous year despite some improvement from
the first quarter. The growth of the very low-end segment was not
sufficient to reverse the decline in traditional mobile phones. However,
the robust growth of converged mobile devices was a sign that the
recession may have reached the bottom and some improvements can be
expected for second half of the year. In CEMA, the market showed
more vitality after two quarters of abrupt decline, with regional
shipments approximately 15% higher than in the previous three months. With
handset distribution and sale largely out of mobile operator hands, the
financial crisis had squeezed inventory out of the channel as bank and
trade credit dried up. The recovery of shipments in the second quarter
suggests that this process has now been largely completed and that
underlying demand remains robust.
- High levels of private savings and
aggressive national fiscal policies have helped sustain the demand for
consumer products in Asia/Pacific, even as the global economy
sputters along. Now, with several Asian economies showing the green shoots
of recovery, mobile phone demand has also responded in a healthy fashion,
with shipments for the region once again surpassing 100 million units in
2Q09.
Top
Five Mobile Phone Vendors
Nokia finished 2Q09 with shipments back above the 100
million unit mark. Launches of key devices, including the E71, N97, and the
5800 converged mobile devices, mitigated further ASP decline and operational
efficiency resulted in healthy gross margins overall. Nokia's shipment volumes
were roughly equal to those of the next three vendors by the end of the
quarter. While still substantial, this is nevertheless down from a year ago
when Nokia's shipments were nearly equal to the next four vendors' combined
total shipments. While CEO Kallasvuo was pleased with the overall results and
the company's traditional advantages, he also highlighted Nokia's ability to
shape the evolving wireless landscape, combining mobile devices and the Internet
with Nokia's strong operations, ecosystems, customer relationships, and metrics
to track success.
Samsung saw its shipment volumes edge back above the 50
million unit mark on the strength of its broad product portfolio and was
rewarded with the highest year-over-year gain among leading vendors. Its
touch-screen and messaging devices continued to find a warm reception in Europe
and North America while feature-capable devices and slim form factors attracted
customer attention in emerging markets. Meanwhile, operating margins returned
to double digits despite higher marketing expenses. By the end of 1H09, Samsung
was nearly halfway to its goal of shipping 200 million units in 2009.
LG
Electronics maintained its momentum
from 1Q09 to gain market share and improve profitability. Driving its success
was a strong portfolio of mid-tier and newly-introduced high-end devices as
well as overall operational efficiency. LG also unveiled plans to improve its
converged mobile device presence, with the launch of the GM730 this summer and
up to five models by the end of this calendar year. Over the next two years, LG
hopes to capture 10% of the converged mobile device market.
Motorola posted another quarter of operating losses as well
as the largest year-over-year decline among the leading vendors. Not to be
overlooked, however, is its significant improvement in reducing those losses
50% from the previous quarter. The company also made progress filling in some
of the gaps in its product portfolio with the launch of several messaging
devices. These include the Clutch i465, Karma QA1 and the Rival A455. Moreover,
plans to release Android-powered converged mobile devices during 2H09 appear to
be on track and gained further clarity with the rollout for accelerated
application development with its MOTODEV program.
Sony
Ericsson's challenges in the mobile
phone market continued, earning the company a fifth place finish in 2Q09 while
falling further behind Motorola. Ongoing cost reductions, competitive pressures
in key regions, and an aging product portfolio resulted in a gross margin of
just 12%, but nonetheless an improvement from the 8% in the previous quarter.
Sony Ericsson announced plans it hopes will bear fruit later this year,
including the launch of its GreenHeart and Communication Entertainment product
lines, as well as enhanced content, services, and applications for consumers.
Top
Five Mobile Phone Vendors, Shipments, and Market Share, Q2 2009 (Units
in Millions)
| Vendor
|
2Q09 Shipment Volumes
|
2Q09 Market Share
|
2Q08 Shipment Volumes
|
2Q08 Market Share
|
2Q09/2Q08 Change
|
|
Nokia
|
103.2
|
38.3%
|
122.0
|
40.4%
|
-15.4%
|
|
Samsung
|
52.3
|
19.4%
|
45.8
|
15.2%
|
14.2%
|
|
LG Electronics
|
29.8
|
11.1%
|
28.1
|
9.3%
|
6.0%
|
|
Motorola
|
14.8
|
5.5%
|
27.9
|
9.2%
|
-47.0%
|
|
Sony Ericsson
|
13.8
|
5.1%
|
24.4
|
8.1%
|
-43.4%
|
|
Others
|
55.7
|
20.7%
|
54.0
|
17.9%
|
3.1%
|
| Total
|
269.6
|
100.0%
|
302.2
|
100.0%
|
-10.8%
|
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