The economic downturn has taken its toll on handsets. Worldwide mobile phone sales to end
users totalled 314.7 million units in the fourth quarter of 2008, a 4.6
per cent decline from the fourth quarter of 2007, according to Gartner,
Inc. Manufacturers continued to struggle against low consumer
confidence in both emerging and mature markets.
The top five mobile phone vendors all experienced a decline in sales in
the fourth quarter of 2008 (see Table 1). The industry did experience
growth for the year, with worldwide mobile phone sales to end users
surpassing 1.22 billion units in 2008, a 6 per cent increase over 2007
sales (see Table 2).
"Mobile phones have traditionally been one of consumers' preferred
presents for Christmas. However, in the fourth quarter of 2008
consumers were concerned about taking on the contract associated with
the most attractive products on the market," said Carolina Milanesi,
research director for mobile devices at Gartner, based in Egham, U.K.
"Consequently, mobile devices in both emerging and developed markets
experienced the lowest quarter-on-quarter growth (2 per cent) ever
recorded in a fourth quarter."
Sales into the channel reached 297.3 million in the fourth quarter of
2008, while sales to users were just short of 314.7 million units. This
is the biggest difference recorded since Gartner started measuring the
market in 2001. Such a difference was the result of the channel
reducing the inventory it holds. Low consumer confidence is forcing
distributors and retailers to limit the volume they hold in stock,
because the channel cannot afford significant capital investment.
"Efforts to reduce inventory will intensify in the first quarter of
2009 and continue into the second quarter of 2009. In the second half
of 2009, the channel will have to start re-stocking and this will help
sell-in volumes," said Ms Milanesi. "This will not mark the start of a
market recovery -- we do not expect demand to stabilise before 2010."
Table 1
Worldwide Mobile Terminal Sales to End Users in 4Q08 (Thousands of Units)
|
Company |
4Q08 Sales |
4Q08 %) |
4Q07 Sales |
4Q07 (%) |
| Nokia |
118,791.0 |
37.7 |
133,194.4 |
40.4 |
| Samsung |
57,517.9 |
18.3 |
44,353.1 |
13.4 |
| Sony Ericsson |
23,554.1 |
7.5 |
29,848.8 |
9.0 |
| Motorola |
21,700.1 |
6.9 |
39,291.0 |
11.9 |
| Others |
65,003.8 |
20.7 |
59,822.4 |
18.2 |
|
TOTAL |
314,707.8 |
100.0 |
330,054.7 |
100.0 |
Note* This table includes iDEN shipments, but excludes ODM to
OEM shipments.
Source: Gartner (March 2009)
"Longer replacement cycles in Western Europe and a very stagnant market
in Japan affected sales from the start of the year," Ms Milanesi said.
"Other regions, such as Asia/Pacific and Africa, were able to sustain
growth as the economic downturn was limited to mature markets in the
first half of 2008. From the third quarter of 2008, it became clear
that the economic impact was spreading to emerging markets. Sales
rapidly deteriorated, making 2008 a challenging year for the entire
mobile phone industry."
Table 2
Worldwide Mobile Terminal Sales to
End-Users in 2008 (Thousands of Units)
|
Company |
2008Sales |
2008 MS(%) |
2007Sales |
2007 MS (%) |
| Nokia |
472,315.0 |
38.6 |
435,453.1 |
37.8 |
| Samsung |
199,182.0 |
16.3 |
154,540.7 |
13.4 |
| Motorola |
106,590.0 |
8.7 |
164,307.0 |
14.3 |
| LG |
102,555.4 |
8.4 |
78,576.3 |
6.8 |
| Sony Ericsson |
93,414.5 |
7.6 |
101,358.4 |
8.8 |
| Others |
248,189.0 |
20.4 |
218,604.3 |
18.9 |
|
TOTAL |
1,222,245.2 |
100.0 |
1,152,839.8 |
100.0 |
Note* This table includes iDEN shipments, but excludes ODM to
OEM shipments.
Source: Gartner (March 2009)
Vendor Overview
Nokia sold nearly 119 million mobile phones in the fourth quarter
of 2008, giving it a market share of 37.7 per cent. This was a decline
both sequentially and year-on-year. With sales in emerging markets
slowing due to the economic environment, Nokia felt more pressure in
the second half of 2008. Nokia's delay in rolling out products with
touchscreen functionality caused its smartphone sales to suffer.
Samsung finished a strong year with a good
performance. In the fourth quarter of 2008, Samsung was able to grow
share sequentially and also year on year, as products such as the
Tocco, Innov8 and Omnia continued to drive sales in regions such as
Western Europe and Asia/Pacific. Samsung's quick response to demand for
touch interfaces was the main reason for its success.
After a blip in the third quarter of 2008, when LG lost its fourth
place to Motorola, LG was able to get back on track and jump two places
to No. 3 in the fourth quarter of 2008 worldwide market share. In the
fourth quarter, LG moved into second place in North America, due to its
dominant position at Verizon Wireless and very strong sales at
TracFone. In India, LG got back into Reliance Communication after
issues it had in the third quarter of 2008, and it was actually able to
burn some inventory during the quarter.
As we predicted, Sony Ericsson was unable to hold on to the third
position in the worldwide ranking, which it reached in the third
quarter of 2008. In the fourth quarter, its sales dropped to 23.6
million units, putting it in fourth place. Not only did Sony Ericsson
fail to reduce stock levels in the fourth quarter, it also built a
slight inventory. As both music players and cameras have become more
widespread in the competitors' portfolios, it has been more difficult
for Sony Ericsson's Walkman and Cybershot product ranges to stand out.
Lack of pure touchscreen devices also impacted overall performance in
2008.
Motorola's performance worsened in the fourth quarter of 2008, when it
slipped to fifth place in the worldwide ranking. Some reductions in
inventory helped Motorola finish the year in third position with sales
that were close to 107 million units. The drop in market share on a
year-to-year basis (-5.6 percentage points) is a clear indication of
the troubled times the vendor has been facing. Lack of compelling
products throughout the portfolio has made it impossible for Motorola
to slow down its sales decline. It has been losing share in all key
regions because it lacks 3G products and touchscreen devices, and has
poor support for "hot" features, such as GPS.
Regional Analysis
In Asia/Pacific, quarterly sales of
mobile handsets fell sequentially for the first time in the fourth
quarter of 2008, as sales declined by 8.4 per cent over the third
quarter of 2008, reaching 107 million units. The drop was mainly due to
lower replacement sales. "Sales of mobile devices to first-time buyers
continued to grow, with net-new mobile subscribers declining only
marginally, from 81 million in the third quarter of 2008 to 79 million
in the fourth quarter of 2008," said Anshul Gupta, principal analyst
for Gartner, based in Mumbai. However, weak consumer confidence
resulted into poor replacement sales, as consumers postponed their
replacement decisions."
In Europe, the Middle East, and Africa (EMEA), mobile handsets sales in
the fourth quarter of 2008 grew sequentially by 2.5 per cent to 59.3
million units, bringing the market for the full year to 229.5 million.
Sales in the fourth quarter of 2008 declined 3.5 per cent year-on-year,
showing users were more conscious of their spending. "Reduced consumer
confidence, combined with lower subsidies from operators, discouraged
users from upgrading their current device. Instead, users chose
less-expensive devices when buying a new phone, or held on to their
existing ones," said Annette Zimmerman, senior research analyst at
Gartner, based in Germany.
Sales in Japan in the fourth quarter of 2008 declined 31.4 per cent
compared to the fourth quarter of 2007. Although the global economic
downturn did affect customer motivation to spend, the major cause of
this decline in sales was due to a rise in retail prices. "The vendors
who gained the top market share positions in previous quarters kept
their share, while other vendors saw their shares decline," said Atsuro
Sato, research analyst for Gartner, based in Japan. "Success is
attributable to competitive portfolios and consumer recognition,
whether broad or in specific customer segments."
Latin America's handset sales grew sequentially by 9.9 per cent in the
fourth quarter of 2008, with nearly 37.4 million units sold during the
quarter. "However, for the full year, nearly 142 million phones were
sold, meaning that the fourth quarter of 2008 was smaller than the
typical fourth quarter, accounting for only 26.5 per cent of total
sales for the year, rather than the usual 30 per cent," said Tuong Nguyen, analyst for mobile terminals at Gartner, based in Arlington, Virginia. "In fact, the second quarter of 2008 was the biggest quarter of the year."
The North American handset market ended 2008 with a record quarter of
49.1 million sales to users, roughly comparable to the fourth quarter
of 2007 when just under 49 million units were sold. "Smartphones
continued to be a driving force for consumers to upgrade their
devices," said Hughes De La Vergne, principal analyst for mobile terminals research at Gartner, based in Dallas, Texas. "Introductions
of new products such as the RIM BlackBerry Storm and T-Mobile G1 helped
smartphone sales grow to account for roughly 20 per cent of total sales
in the region."
Sales in Western Europe reached 53.4 million units in the fourth quarter of 2008 -- a
good quarter considering the difficult year. This was mainly the result
of aggressive stock-level reduction in the channel. Economic
uncertainly had forced distributors, retailers and operators to be very
cautious with their inventory levels. Despite the strong performance
recorded in 4Q08, overall sales in 2008 were 16.4 million lower than in
2007. This is because consumers locked into 18- and 24-month contracts
were unable to upgrade. Touchscreen functionality was the most sought
after feature during the quarter, with vendors such as LG, Samsung and
RIM benefiting the most