Press release
Worldwide sales of mobile phones reached 294.3 million units
in the first quarter of 2008, a 13.6 per cent increase over the first quarter
of 2007, according to Gartner, Inc. Sales of mobile phones in Western Europe decreased 16.4 per cent from
the first quarter of 2007, the first decline in this region since Gartner began
tracking the mobile devices market in 2001.
“While sales in emerging markets continued to be driven by strong net
new subscribers’ growth, mature markets felt the pressure of an uncertain
economic environment,” said Carolina Milanesi, research director for mobile
devices at Gartner, based in Egham, UK. “Sales of high-end devices in
particular were lower as consumers turned to mid-tier devices when looking to
upgrade their old phones. Phone manufacturers should strengthen their mid-tier
offerings in order to cater to those users that might be reticent to invest too
much money in replacing their old phones when the economic environment remains
challenging.”
Nokia sold 115.2 million mobile phones in the first quarter of 2008, as its
market share slipped slightly to 39.1 per cent (see Table 1). Nokia was able to maintain market leadership
thanks to the richness of its portfolio, which appeals to users in both
emerging and mature markets. Sales in the ultra-low-cost segment remained
strong due to Nokia's distribution strategy, economies of scale and brand
power. However, competition in this segment and at the high end is increasing.
To stay ahead, Nokia will have to continue to integrate new technologies in its
handsets and improve usability and design.
Samsung maintained its momentum in the first quarter of 2008 with sales
reaching 42.4 million units. The South Korean vendor not only held on to its
No. 2 position worldwide, but it also widened the gap from third-placed
Motorola as its market share grew to 14.4 per cent. Samsung is reacting quickly
to the focus on touch-screen devices. “Samsung's choice to be a quick follower
has paid off so far, but it needs to focus on diversifying its designs and
strengthening its lower-end portfolio to increase sales in emerging markets,”
said Ms Milanesi.
Motorola
carried the problems it had in 2007 through to the first quarter of 2008 and
sales fell to 29.9 million units. The US manufacturer continues to struggle in
finding the successor to its popular Razr. Although it introduced new models,
its portfolio is simply not competitive enough. Ms Milanesi said: “Motorola is
unlikely to introduce many products in the second half of 2008, a time when
most competitors will bring new additions to the market, so it stands little
chance of winning back its No. 2 position. It may even have to watch out for a
threat from current No. 4 player LG.”
LG had an excellent start to 2008 with sales reaching 23.6 million units and a
market share of 8 per cent. As a result, LG overtook Sony Ericsson to become
the No. 4 vendor worldwide. With a strengthened portfolio, LG capitalised on
the attention the market has given to touch-screen devices since the launch of
the Apple iPhone. Although the LG Prada, Shine and KF600 models have proved
popular, LG must remember that touch-screen phones do not appeal to everyone.
The South Korean vendor needs to build a stronger smartphone portfolio, as
consumers and operators have started to place more emphasis on this market
segment.
Sony Ericsson was another vendor that had a difficult start to 2008. Its sales
reached 22.1 million units, but this was not enough to hold on to the No. 4
spot. Sony Ericsson attributed these weak results to the difficult conditions
in the Western European market, which experienced some softness in the high-end
segment. With new products for the second half of 2008 and with a stronger
mid-tier portfolio, Sony Ericsson is in a good position to win back its fourth
place in the market share rankings.
Regional Analysis
In the
first quarter of 2008, 114.4 million mobile devices were sold in Asia/Pacific.
This represented a 26.6 per cent increase over the first quarter of 2007. India
remained a high-growth market, and South Korea became a high growth market as
well during the quarter, as consumers upgraded their handsets before the new
extended contracts are put in place by operators in the second quarter of 2008.
“Growth in Asia/Pacific was driven by a high number of new subscribers,
lower-priced phones based on wideband code division multiple access (WCDMA)
technology, as well as low-cost global system for mobile communications (GSM)
phones and ultra-low-cost CDMA devices,” said Anshul Gupta, principal
research analyst for mobile terminals at Gartner, based in Mumbai, India.
Sales in the Eastern Europe,
the Middle East and Africa region reached 56.4 million units, which represented
a 25.8 per cent increase year-on-year. “Sales in the Baltics remained slow in
response to the strong slowdown in new additions that began in 2007 as
operators focused more about shifting users to contracts than not acquiring
more prepay users,” said Annette Zimmermann, senior research analyst for mobile
devices at Gartner, based in Munich, Germany. Several countries
experienced good growth in net new additions.
In Japan, sales to end users numbered 13.2 million units in the first quarter
of 2008, a decrease of 10.1 per cent year-on-year. “There were no new phone
features in the first quarter of 2008 that were strong enough to drive growth,
unlike the first quarter of 2007 when having a music player function and an
embedded integrated services digital broadcasting — terrestrial (ISDB-T) tuner
persuaded users to replace their devices,” said Nahoko Mitsuyama,
principal analyst for mobile communications research at Gartner, based in
Tokyo.. “The proportion of
WCDMA devices sold in Japan decreased from 63.2 per cent in the first quarter
of 2007 to less than 30 per cent in the first quarter of 2008. Conversely, the
proportion of high-speed downlink packet access (HSDPA) devices rose sharply
from 1.9 per cent to more than 35 per cent in the same period.”
Sales of mobile handsets in the Latin America region increased by nearly 28.4
per cent compared with the first quarter of 2007, to reach nearly 32.5 million
units in the first quarter of 2008. “There was some buildup of inventory in
Latin America — specifically in Brazil — as operators prepared for
Valentine’s and Mother’s Day promotions,” said Tuong Nguyen, analyst for
mobile terminals at Gartner, based in Arlington, Virginia.
In North America, sales to end
users totalled 41.9 million units in the first quarter of 2008, a 2.4 per cent
increase from the first quarter of 2007. “AT&T and Verizon Wireless had
solid quarters, while Sprint Nextel continued to have problems,” said
Hughes De La Vergne, principal analyst for mobile terminals research at
Gartner, based in Dallas, Texas. “New subscriber levels were low, implying that the weak economy may be
having a negative effect on the wireless handset market. Approximately 90 per
cent of sales came from the replacement market.”
Sales of mobile phones in Western Europe totalled 35.9 million units in the
first quarter of 2008, a decrease of 16.4 per cent from the first quarter of
2007. “Operators in this region have been driving sales of higher-end devices
by offering higher subsidies but with longer contract periods, which is having
a negative impact on replacement cycles,” Ms Milanesi said. “Sales of high-end devices were
also adversely affected by the economic slowdown that many countries are
experiencing. Consumers pressured by a higher cost of living continued to
replace their phones but chose devices from the mid-tier, which tends to be
offered for free and with shorter and less expensive service contracts.”
Ms Milanesi concluded: “We remain confident that 2008 will be a growth year for
the mobile phone industry. Sales, driven in particular by emerging markets,
will continue to rise in the range of 10-15 per cent. However, the value of the
market will be lower than we stated in our forecast update published in
December 2007. This is because the current economic slowdown and higher fuel
costs will force consumers to defer phone purchases in mature markets, while
higher food prices will lead to longer replacement cycles in emerging ones.”
