The mobile phone market was really a "downer" with 12.6% lower units in Q4 notes a new report from IDC. The only positive note was for smartphones in 2008, the converged mobile devices segment grew 22.5% over 2007, outpacing the rest of the
industry.
"The fourth quarter was
the perfect storm of factors to produce this result," said Ramon Llamvas, senior research analyst with IDC's Mobile Devices Technology and Trends team.
"A combination of weak end-user demand, currency volatility, and limited
credit availability prevented the market from experiencing the usual seasonal
increase in shipments.
"We expect the first half of 2009 to be very challenging
as vendors and distributors grapple with clearing inventory. Should these
conditions persist, the mobile phone market may not recover until later this
year, and possibly not until 2010."
Top Five Worldwide Mobile
Phone Vendors, Shipments, and Market Share, Q4 2008 (Units in Millions)
|
Vendor |
Q408 Unit Shipments |
Q408 Market Share |
Q407 Unit Shipments |
Q407 Market Share |
4Q08/4Q07 Change |
|
1. |
113.1 |
39.1% |
133.5 |
40.4% |
-15.0% |
|
2. |
52.8 |
18.3% |
46.3 |
14.0% |
14.1% |
|
3. |
25.7 |
8.9% |
23.7 |
7.2% |
8.4% |
|
4. |
24.2 |
8.4% |
30.8 |
9.3% |
-21.4% |
|
5. |
19.2 |
6.6% |
40.9 |
12.4% |
-53.0% |
|
Others |
54.0 |
18.7% |
55.6 |
16.8% |
-2.9% |
|
Total |
289.0 |
100.0% |
330.8 |
100.0% |
-12.6% |
op Five Worldwide Mobile
Phone Vendors, Shipments, and Market Share, Full Year 2008 (Units in Millions)
|
Vendor |
2008 Unit Shipments |
2008 Market Share |
2007 Unit shipments |
2007 Market Share |
4Q08/4Q07 Change |
|
1. |
468.4 |
39.7% |
437.1 |
38.3% |
7.2% |
|
2. |
196.7 |
16.7% |
161.1 |
14.1% |
22.0% |
|
3. |
100.7 |
8.5% |
80.5 |
7.1% |
25.1% |
|
4. |
100.1 |
8.5% |
159 |
13.9% |
-37.0% |
|
5. |
96.6 |
8.2% |
103.4 |
9.1% |
-6.6% |
|
Others |
218.5 |
18.5% |
199.8 |
17.5% |
9.4% |
|
Total |
1180.9 |
100.0% |
1140.9 |
100.0% |
3.5% |
Source: IDC Worldwide
Quarterly Mobile Phone Tracker, February 4, 2009
With clear expectations that
2009 will be more difficult than 2008, handset vendors, chipset manufacturers,
and operators will all have to work in sync to rebuild consumer interest in
mobile spending.
"In mature markets,
such as North America and EMEA (Europe, Middle East, Africa), the converged
mobile device segment grew 70.1% and
25.0% respectively in 2008," said Ryan Reith, senior research
analyst with IDC's Mobile Phone Tracker. "This segment is unique and
unlike the rest of the market. Data attachment rates for these devices is well
beyond that of traditional mobile phones, and the devices and services catering
to this segment were more readily available than ever before in 2008. As long
as operators are able to continue to subsidize these devices, and developers
continue to enhance applications, then this segment will be a silver lining to
an otherwise gloomy market."
"Vendors are not taking
this situation lightly, and are undertaking plans to run lean and maintain user
interest," added Llamas. "Cost reduction and operational efficiency
have become cornerstones to corporate strategy moving forward and, for some,
that can include headcount reduction. At the same time, converged mobile
devices and services will become primary targets for vendors to focus their
resources. Most vendors have already signaled their intentions to concentrate
on the hot converged mobile devices space by aligning with operating systems
that fit their strategy. Services, meanwhile, have played only a small role in
the overall market, but will see increased importance as vendors compete for
the user experience."
Regional Analysis
- The North America market suffered both
sequential and year-over-year declines in 4Q08 as economic conditions
worsened. The one bright spot was the converged mobile device market,
which posted double-digit growth. Driving this category forward were a
combination of positive factors, including strong consumer interest,
growing popularity of unlimited calling and data plans, and market leaders
Research In Motion and Apple keeping channels stocked with their devices.
- The Latin America mobile phone marketplace showed a
slowdown in 4Q08 as falling currency exchange rates led to a decline in
both consumer and commercial purchases. Converged mobile device
performance was largely flat compared to third quarter results as the
shipment numbers from the Apple iPhone launch in 3Q08 could not be
sustained for the final quarter of the year, and both Motorola and Palm
posted poor results. The traditional mobile phone market also experienced
flat growth, marking the first time that this segment did not post two
consecutive quarters of year-on-year growth.
- The Western Europe handset market was hard hit by the financial crisis
and shrank in the final quarter of 2008 at a rate never before seen. The
traditional holiday campaigns and new product launches were not enough to
boost sales in comparison with the previous year and almost all vendors
experienced a significant slump in sales. While the previously buoyant
market in Central and Eastern Europe, the Middle East and Africa
did not show a major retrenchment against the last quarter of 2007, the
shipments of market leader Nokia were weak and sales of converged mobile
devices contracted in relation to the total market.
- As the Asia/Pacific
market declined in 4Q08, device makers seeking a respite in the emerging market
of China were left disappointed. Chinese consumers held off on mobile phone
purchases for much of the quarter, largely due to the worsening economic
climate, but also due to some anticipation of 3G promotions in 2009.
Top Five Mobile Phone
Vendors
- Nokia
gave early indications that 4Q08 would be a challenging quarter due to the
economic downturn, and by quarter's end its sales for devices and services
had declined nearly 27% from the previous year. In addition, Nokia took
the step of reducing headcount in order to lower overall costs. But during
these difficult times, Nokia spelled out the need to innovate and grow. To
do this, Nokia will continue to bring the Internet onto mobile devices
while also developing five interconnected services - maps, music,
messaging, media, and games - for its handsets.
- Samsung
experienced lower sales than expected due to the global recession and saw
its operating margin suffer. Despite these results, the company had strong
demand for the products where it had invested its resources, particularly
touchscreen-enabled phones and converged mobile devices in developed
markets as well as mid-range camera phones in emerging markets. These
three product segments will continue to be the company's key focus in 2009
along with improving cost competitiveness.
- LG Electronics climbed into third place for the quarter and for
the year, both milestones for the company. But, due to sales declines
within key markets, its profit margins slid back down into the single
digits for the first time since 4Q07. Looking ahead to 2009, the company
will emphasize digital convergence on its handset portfolio, and will
launch ten new models, including an Android phone by 2Q09. In addition,
its new low-tier platform will enable the company to compete aggressively
within low-end markets.
- Sony Ericsson slipped to fourth place during the quarter, citing lower
profitability due to ongoing corporate restructuring, higher expenses
related to sales, and a less favorable product mix. Even with these
negative results, the company made significant investments to compete in
the coming months, most notably announcing its participation with the Open
Handset Alliance (OHA) to build its converged mobile device portfolio.
Next, Sony Ericsson plans to build on its expertise in music and imaging
as well as harnessing the Internet to bring more integrated mobile
entertainment devices. Finally, Sony Ericsson will expand its services arm
now that it has launched its music service PlayNow in Sweden.
- Motorola ended the quarter in fifth place, posting another quarter of
operating losses driven not only by the global economic crisis, but also
due to its ongoing restructuring and gaps in its product portfolio. While
this is the latest chapter in Motorola's slide in the market, Co-CEO
Sanjay Jha pointed out the progress made in terms of cost reduction and
platform rationalization, and spoke highly of its converged mobile device
innovation around Android. Moving forward, Motorola will focus its efforts
on mid-range and high end devices within the Americas and China, a major
departure from the company's strategy just two years ago.