There was another
year-over-year decline in the second quarter of 2009 (2Q09) for the worldwide global handset market. According
to IDC's Worldwide Quarterly Mobile Phone Tracker, handset vendors
shipped a total of 269.6 million units worldwide, down 10.8% from 302.2
million units in 2Q08. The second quarter results are an improvement
from the 17.2% decrease seen during 1Q09, but ongoing challenges
stemming from the economic crisis remain a factor to watch.
"The challenges from the previous nine months - aggressive channel
destocking, foreign exchange volatility, and uncertain demand -
continued to plague the mobile phone market in the second quarter, but
were not as severe as before," says Ramon Llamas, senior research
analyst with IDC's Mobile Devices Technology and Trends team. "Those
vendors who were able to adjust quickly were rewarded with greater
shipment volumes. Although this tested the handset vendors' abilities to
hit a moving target, customers reaped the benefits of lower-costs, even
on key high-end devices."
For the full year, IDC believes that the market will decline 13%, with
the market outlook for 2009 remaining relatively consistent among the
top vendors. The small signs of improvement were centered around
consumer demand for high-end handsets and the manufacturers' ability to
shift portfolio to meet these needs.
"Among the big handset vendors, Nokia, Samsung, Research In Motion, and
Apple, all beat expectations for smartphones within the second quarter,"
said Ryan Reith, senior research analyst with IDC's Worldwide Quarterly
Mobile Phone Tracker. "This demand for high-end mobile phones has
created a price war among large mobile operators and handset vendors.
Apple's price cut on the iPhone 3G reflects a trend we expect to
continue in the upcoming quarters, and one that will effectively
maintain competitive pricing within mature markets."
Top Five Mobile Phone Vendors
Nokia finished 2Q09 with shipments back above the 100 million
unit mark. Launches of key devices, including the E71, N97, and the 5800
converged mobile devices, mitigated further ASP decline and operational
efficiency resulted in healthy gross margins overall. Nokia's shipment
volumes were roughly equal to those of the next three vendors by the end
of the quarter. While still substantial, this is nevertheless down from
a year ago when Nokia's shipments were nearly equal to the next four
vendors' combined total shipments. While CEO Kallasvuo was pleased with
the overall results and the company's traditional advantages, he also
highlighted Nokia's ability to shape the evolving wireless landscape,
combining mobile devices and the Internet with Nokia's strong
operations, ecosystems, customer relationships, and metrics to track
success.
Samsung saw its shipment volumes edge back above the 50 million
unit mark on the strength of its broad product portfolio and was
rewarded with the highest year-over-year gain among leading vendors. Its
touch-screen and messaging devices continued to find a warm reception in
Europe and North America while feature-capable devices and slim form
factors attracted customer attention in emerging markets. Meanwhile,
operating margins returned to double digits despite higher marketing
expenses. By the end of 1H09, Samsung was nearly halfway to its goal of
shipping 200 million units in 2009.
LG Electronics maintained its momentum from 1Q09 to gain market
share and improve profitability. Driving its success was a strong
portfolio of mid-tier and newly-introduced high-end devices as well as
overall operational efficiency. LG also unveiled plans to improve its
converged mobile device presence, with the launch of the GM730 this
summer and up to five models by the end of this calendar year. Over the
next two years, LG hopes to capture 10% of the converged mobile device
market.
Motorola posted another quarter of operating losses as well as
the largest year-over-year decline among the leading vendors. Not to be
overlooked, however, is its significant improvement in reducing those
losses 50% from the previous quarter. The company also made progress
filling in some of the gaps in its product portfolio with the launch of
several messaging devices. These include the Clutch i465, Karma QA1 and
the Rival A455. Moreover, plans to release Android-powered converged
mobile devices during 2H09 appear to be on track and gained further
clarity with the rollout for accelerated application development with
its MOTODEV program.
Sony Ericsson's challenges in the mobile phone market continued,
earning the company a fifth place finish in 2Q09 while falling further
behind Motorola. Ongoing cost reductions, competitive pressures in key
regions, and an aging product portfolio resulted in a gross margin of
just 12%, but nonetheless an improvement from the 8% in the previous
quarter. Sony Ericsson announced plans it hopes will bear fruit later
this year, including the launch of its GreenHeart and Communication
Entertainment product lines, as well as enhanced content, services, and
applications for consumers.
Top Five Mobile Phone Vendors, Shipments, and Market Share, Q2 2009
(Units in Millions)
| Vendor |
2Q09 Shipment |
2Q09 Market |
2Q08 Shipment |
2Q08 Market |
2Q09/2Q08 |
|||||||||
| Nokia | 103.2 | 38.3% | 122.0 | 40.4% | -15.4% | |||||||||
| Samsung | 52.3 | 19.4% | 45.8 | 15.2% | 14.2% | |||||||||
| LG Electronics | 29.8 | 11.1% | 28.1 | 9.3% | 6.0% | |||||||||
| Motorola | 14.8 | 5.5% | 27.9 | 9.2% | -47.0% | |||||||||
| Sony Ericsson | 13.8 | 5.1% | 24.4 | 8.1% | -43.4% | |||||||||
| Others | 55.7 | 20.7% | 54.0 | 17.9% | 3.1% | |||||||||
| Total | 269.6 | 100.0% | 302.2 | 100.0% | -10.8% |
Source: IDC Worldwide Quarterly Mobile Phone Tracker, July 30, 2009
Note: Vendor shipments are branded shipments and exclude OEM sales for
all vendors.
Mobile Phones - These small, battery-powered, voice-centric
devices utilize operator-provided cellular/PCS air interfaces for voice
communication. They are designed primarily, in both form factor and
feature set, for a compelling mobile telephony experience, but may also
include text-messaging capability. Mobile phones may include a headset
jack for hands-free operation as well as a variety of features, such as
personal information management, multimedia, games, or office
applications. Mobile phones exist at all points along the form factor,
price point, and feature set continua. Mobile phones that combine voice
communications capabilities with pen or keypad handheld data features
are tracked within the Converged Devices category.
Regional Analysis
-
Amidst the ongoing economic challenges in North America, the
market for converged mobile devices thrived with the arrival of the
Palm Pre and the iPhone 3G S towards the end of the quarter. Shipment
volumes for other converged mobile device vendors also benefited from
increased attention and price adjustments on the segment, pushing the
market even higher. At the same time, interest in prepaid devices
remained strong for budget-conscious customers. Finally, the market
for mid-tier and high-end devices began to show signs of improvement
with the arrival of new devices from leading vendors. -
Despite the expected decrease in volume from last year in Latin
America, the second quarter of 2009 was stronger than expected,
showing solid sequential growth from the doldrums that were seen in
1Q09. Local currencies in the key markets of Brazil and Mexico
experienced revaluation from the precipitous drops that occurred in
the prior six months, helping to alleviate some of the economic pain
being felt by many businesses and consumers. Interest in 3G services
and offerings have been expanding in the region, helping carriers to
increase, or at a minimum sustain, ARPUs that have been falling over
time. -
Results in Western Europe continue to reflect weaker demand
from the previous year despite some improvement from the first
quarter. The growth of the very low-end segment was not sufficient to
reverse the decline in traditional mobile phones. However, the robust
growth of converged mobile devices was a sign that the recession may
have reached the bottom and some improvements can be expected for
second half of the year. In CEMA, the market showed more
vitality after two quarters of abrupt decline, with regional shipments
approximately 15% higher than in the previous three months. With
handset distribution and sale largely out of mobile operator hands,
the financial crisis had squeezed inventory out of the channel as bank
and trade credit dried up. The recovery of shipments in the second
quarter suggests that this process has now been largely completed and
that underlying demand remains robust. -
High levels of private savings and aggressive national fiscal policies
have helped sustain the demand for consumer products in Asia/Pacific,
even as the global economy sputters along. Now, with several Asian
economies showing the green shoots of recovery, mobile phone demand
has also responded in a healthy fashion, with shipments for the region
once again surpassing 100 million units in 2Q09.