A year-long piece of research from cybersecurity expert FireEye has found that 96pc of mobile malware targets Android devices.
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Worldwide sales of mobile phones fell by 12.6pc in the fourth quarter. Analysts say the first quarter of 2009 looks treacherous for handset makers.
According to IDC, manufacturers shipped a total of 289 million units in Q4, 12.6pc lower than the 330.8 million units shipped during the Q4 of the previous year.
For the full year 2008, vendors shipped a total of 1.18 billion units worldwide, 3.5pc greater than the 1.14 billion units shipped during 2007.
“The fourth quarter was the perfect storm of factors to produce this result,” said Ramon Llamas, 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,” Llamas warned.
If there was one highlight in 2008, it was that the smart phone segment grew 22.5pc over 2007, clearly outpacing the rest of the industry.
“In mature markets, such as North America and EMEA (Europe, Middle East, Africa), the converged mobile device segment grew 70.1pc and 25pc 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 subsidise these devices, and developers continue to enhance applications, then this segment will be a silver lining to an otherwise gloomy market,” Reith added.
With clear expectations that 2009 will be more difficult than 2008, handset vendors, chipset manufacturer and operators will all have to work in sync to rebuild consumer interest in mobile spending.
“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 signalled 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.”
The North American market suffered both sequential and year-over-year declines in the fourth quarter as economic conditions worsened. The one bright spot was the smart phone market, which posted double-digit growth.
“Driving this category forward was 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 western Europe handset market was hit hard 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. The shipments of market leader Nokia were weak, and sales of smart phones contracted in relation to the total market.
Nokia gave early indications that Q4 would be a challenging quarter due to the economic downturn, and by quarter’s end, its sales for devices and services had declined nearly 27pc 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, IDC said 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-than-expected sales 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 smart phones in developed markets, as well as mid-range camera phones in emerging markets.
LG Electronics climbed into third place for the quarter and for the year, both of which were 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 Q4.
Looking ahead to 2009, LG will emphasise digital convergence on its handset portfolio, and will launch 10 new models, including an Android phone by the second quarter of this year. 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 favourable 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.
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. It 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 rationalisation, and spoke highly of the company’s converged mobile device innovation around Android.
By John Kennedy
Pictured: the mobile phone market is under increasing pressure