Sucheta Dalal :Mobile sales decline 6.1% in Q2; Smartphones cross 40 million mark
Sucheta Dalal

Click here for FREE MEMBERSHIP to Moneylife Foundation which entitles you to:
• Access to information on investment issues

• Invitations to attend free workshops on financial literacy
• Grievance redressal


You are here: Home » What's New » Mobile sales decline 6.1% in Q2; Smartphones cross 40 million mark
                       Previous           Next

Mobile sales decline 6.1% in Q2; Smartphones cross 40 million mark  

August 12, 2009


The global slowdown has taken its toll on the uprising mobile markets as well. During the second quarter to end-June, worldwide mobile sales declined 6.1% to 286.1 million units however, at the same time sales of smartphone jumped 27% to cross the 40 million mark.
According to a report by Gartner, the information technology research and advisory company, handset makers Nokia, Samsung and LG continued their dominance in the market with a share of 36.8%, 19.3% and 10.7%, respectively, while Motorola and Sony Ericsson were the losers.
"The recession continued to suppress replacement sales in both mature and emerging markets. The distribution channel has dealt with lower demand and financial pressure by using up 13.9 million units of existing stock before ordering more." the report said.
Although Nokia maintained its leadership position, its portfolio remained heavily skewed toward low-end devices. Its flagship high-end N97 smartphone met little enthusiasm at its launch in the second quarter of 2009 and has sold just 500,000 units in the channel since it started to ship in June, compared to Apple's iPhone 3G S, which sold 1 million units in its first weekend.
Touchscreen and QWERTY devices remained a major driver for replacement sales and benefited manufacturers with strong, touch-focused mid-tier devices. However, the decline in average selling price (ASP) accelerated in the first half of the year and particularly affected manufacturers that focus on mid-tier and low-end devices, where margins are already slim, the report said.
Carolina Milanesi, research director, Gartner, said: "Despite the challenging market, some devices sold well as consumers who would usually have purchased standard midrange devices either cut back to less expensive handsets or moved up the range to get more features for their money."
During the three months to end-June, Samsung and LG witnessed very strong sales of 55 million and 30.5 million units, respectively. Samsung's touchscreen devices, QWERTY phones and smartphone drove sales in mature markets, said Gartner adding that it expects Samsung to continue to gain market share in the second half of 2009 to close the gap with Nokia.
LG also will keep moving into lower-tier devices to drive growth in emerging markets and be well-positioned to take advantage of China's 3G rollout as it can deliver good-value-for-money devices, Gartner said.
Terming Motorola's second quarter performance as slightly better than expected, Garner pointed out that the company's presence has rapidly concentrated on the Americas and it has lost most of its share in Western European markets.
Motorola is expected to bring out its Android-based products in the last quarter 2009.
"Sony Ericsson has neglected to exploit key trends such as QWERTY products for messaging and e-mail, internet browsing and navigation. If it wants to build the presence of its three new products announced this quarter in the channel and capture Christmas sales, the products need to come to market early in the fourth quarter of 2009," Milanesi said.
In the smartphone category, Nokia remained leader with a 45% market share, followed by Research in Motion (BlackBerry) and Apple, with a share of 18.7% and 13.3%, respectively. HTC, which has remained at fourth position since third quarter 2008 due to product delays, expects 2009 revenue to decline by low- to mid-single digits year-on-year, far below its previous outlook of 10% annual growth.
In the smartphone operating system (OS) market, Symbian held 51% share, down from 57% a year ago, while RIM and Apple grew their shares year-on-year. Android's share was just under 2% of the market and more Android-based devices will come to market in the fourth quarter of 2009, intensifying competition in the smartphone OS market, particularly for Symbian and Windows Mobile. Microsoft's share continued to drop year-on-year to account for 9% of the market in the second quarter of 2009.
"Microsoft licensees HTC and Samsung continued to add features to their own interfaces, on top of Windows Mobile, to create more competitive products and make up for the usability constraints of the Microsoft platform," said Roberta Cozza, principal analyst, Gartner.
During the quarter, Palm also launched its much awaited Pre based on the new web OS, but is showing mixed results with sales of just 205,000 units. "Palm currently ranks tenth in the smartphone market and Gartner remains concerned about its ability to gain traction outside the US market, where its brand is less strong," said Cozza.
For the remainder of 2009, manufacturers must offer products with the features that consumers and operators are demanding most strongly - like touchscreens, focus on user interfaces and application or content ecosystems - and work hard to keep operators loyal, concluded Garner. -Yogesh Sapkale [email protected]


-- Sucheta Dalal