News

25 May 2009

 

Handset sales drop 8.6% in Q1, as smart-phones grow 12.7%

Mobile phone sales totaled 269.1 million units in first-quarter 2009, down 8.6% on a year ago, according to the report ‘Dataquest Insight: Market Share for Mobile Devices, 1Q09’ from market research firm Gartner Inc.

Table 1: Smart-phone sales to end-users (in millions).

Company	Q1/09 sales	Q1/09 market share	Q1/08  sales	Q1/08 market  share
Nokia	15	41.2	14.6	45.1
Research In Motion	7.2	19.9	4.3	13.3
Apple	3.9	10.8	1.7	5.3
HTC	2	5.4	1.3	4.0
Fujitsu	1.4	3.8	1.3	4.1
Others	6.9	18.8	9.1	28.1
TOTAL	36,404.4		32,314.9

Table 2: Mobile phone sales to end-users in Q1/2009 (in millions).

Company	Q1/09 sales	Q1/09 market share	Q1/08  sales	Q1/08 market  share
Nokia	97.4	36.2	115.2	39.1
Samsung	51.4	19.1	42.4	14.4
LG	26.5	9.9	23.6	8.0
Motorola	16.6	6.2	29.9	10.2
Sony Ericsson	14.5	5.4	22.1	7.5
Others	62.7	23.4	61.1	20.8
TOTAL	269.1		294.3

“There were some signs of a recovery in markets such as North America and China, but overall sales in the first quarter of 2009 registered the biggest quarter-on-quarter contraction since Gartner began monitoring the market on a quarterly basis in 2001,” says Carolina Milanesi, research director for mobile devices. “This was also the first time the market contracted year over year during the first quarter, a period traditionally helped by strong seasonality in the Asia/Pacific market.”

As Gartner predicted in fourth-quarter 2008, the channel intensified its efforts in Q1/2009 to reduce the levels of stock it holds, in order to minimize capital investment in response to low consumer confidence. Sales into the channel were just short of 244 million units compared with the sales to users of 269.1 million units — a difference of 25 million (up from 17 million in Q4/2008), which is the biggest difference ever recorded. Channel inventory reductions will continue into second-quarter 2009, albeit with lower volumes, expects Gartner.

However, smart-phone sales grew 12.7% to 36.4 million units, rising from 11% of all mobile device sales a year ago to 13.5%. Growth was driven largely by touchscreen products, both in mid-tier and high-end devices, says principal analyst Roberta Cozza. “‘Touch for the sake of touch’ was enough of a driver in the mid-tier space, but tighter integration with applications and services around music, mobile e-mail, and Internet browsing made the difference at the high end of the market,” he adds.

Symbian accounted for 49.3% of smart-phone operating systems (OS) market share, down from 56.9% a year ago. Positive performance by Research In Motion (RIM) and Apple (see Table 1) showed that services and applications are now instrumental to smart-phones’ success, says Gartner. Smart-phone OS market share has risen from 13.3% to 19.9% for RIM (maker of the Blackberry) and from to 5.3% to 10.8% for Apple’s iPhone.

Due to inventory reductions in markets such as Asia/Pacific and Latin America, overall handset sales for Nokia were 97.4 million units, its first time below 100 million units since first-quarter 2007. Nokia continued to lead the market, but its share dropped from 39.1% a year ago to 36.2% (see Table 2). The real impact of the current market recession was on the average selling price (ASP), which fell 18% year-on-year. However, the firm managed to grow its sales in the smart-phone segment by introducing the Nokia 5800 into more regions.

Samsung retained second place with 51.4 million sales and grew its market share from 14.4% to 19.1%. It returned to double-digit profitability due to a good product mix, as sales of its Omnia, Tocco and Pixon handsets continued to benefit from strong consumer interest in touchscreen devices. The launch of the Tocco Ultra Edition late in Q1/2009 and its first Android-based product (the i7500) will help it in a highly competitive second-half 2009.

LG sold 26.5 million units, growing its market share from 8% to 9.9% as it benefited from a strong portfolio of touchscreen, messaging and imaging devices. The new Arena device showcases a new user interface that demonstrates a positive focus on improving usability. However, LG’s biggest challenge is to become competitive in the smart-phone segment as services and applications become more important to customers, says Gartner.

Motorola experienced continued significant difficulties (even in its home market), but had a solid quarter with prepaid operators Boost Mobile and Tracfone. After dropping to fifth position in fourth-quarter 2008, Motorola overtook Sony Ericsson to regain fourth place. It expects worldwide sales of iDEN handsets to rise 50% in 2009. This will help sustain Motorola until it revamps its portfolio in fourth-quarter 2009. Motorola has committed to Android, not only to revamp its position in second-half 2009 but also to produce long-term performance improvements. However, Gartner questions how Motorola will be able to differentiate its offering when so many players in the mobile device market will be delivering Android-based products at the same time.

Sony Ericsson sold 14.5 million units, losing market share on both Q4/2008 and a year ago, driven by both the recession and a weak product portfolio. The product features that helped Sony Ericsson become one of the top vendors (imaging and music) are now too common to be a differentiator. The firm is late to catch on to the popularity of touchscreen devices and has a limited smart-phone portfolio, says Gartner. While its focus on services through Play Now Arena is important, it needs to ensure its devices include the most desirable applications and features for consumers.

In second-quarter 2009, Gartner expects inventory-reduction efforts to continue (although to a lesser extent). Due to this, following Q1’s better-than-expected sales to users, overall sales to users for 2009 will remain considerably higher than the sell-in to the channel that many handset vendors are expecting, believes Milanesi. “Device vendors will focus increasingly on smart-phones, improved user interfaces and services to differentiate themselves, and fuel consumer demand,” she adds. “We maintain our view that sales to users will decrease by about 4% for 2009 compared with 2008, while sell-in will slow to around a 10% decrease.”

See related items:

Handset shipments fall at record rate in Q1/2009

Mobile phone shipments to fall 8.3% in 2009

Cell-phone shipments fall 10% in Q4/2008

Search: Handset shipments

Visit: www.gartner.com