Financial crisis hits mobile phone market

31 Oct 2008

The world’s mobile phone industry has felt the full force of the financial crisis with handset sales down 0.4pc to 299 million devices shipped in the third quarter.

Historically, the third quarter has been a ramp-up quarter as manufacturers load their sales channels with handsets in preparation for the Christmas sales season, prompting usual year-over-year rates of 20pc growth.

This year, however, this has failed to pass, IDC said.

Future Human

“Handset vendors felt the pressures of the dismal economy in the third quarter of 2008, and as a result, shipments and revenues were down almost across the board,” said Ryan Reith, senior research analyst with IDC’s Quarterly Mobile Phone Tracker.

“There were two signs of hope from two major players during third-quarter earnings. First, as highly anticipated and now confirmed, Apple reported an extremely successful quarter, and noted it is on pace to surpass its initial 2008 shipment estimates.

“Second, Nokia’s CEO Olli-Pekka Kallasvuo announced a positive outlook for 2008, despite a tough third quarter. This offers reassurance to all industry players as Nokia has been a clear leader in the mobile phone space for quite some time.”

Looking forward to the holiday season, mobile phone average selling prices have already begun to drop and marketing campaigns are ramping up, and competition for buyers will remain high as spending will be a concern to consumers.

IDC expects tight economic conditions will make 2009 slower and more competitive as well.

“While the overall mobile phone market registered small growth compared to last year, the market for converged mobile devices (commonly known as smart phones) posted strong gains,” added Ramon Llamas, senior research analyst with IDC’s Mobile Devices Technology and Trends.

“The worldwide release of the Apple iPhone 3G earlier this summer marked a major step, not only for Apple, but also raised the profile of converged mobile devices as a whole. Add on top of that the attention generated by the Google-powered HTC G1 (pictured), and the converged mobile device suddenly finds itself as the device sought by both seasoned and first-time users.”

In the EMEA region, manufacturers reported mixed results with converged mobile devices showing the strongest growth. While the financial crisis impacted sales in Russia and eastern Europe, emerging markets in general proved resilient to the slowdown.

In Asia, China and Indonesia remained on a growth trajectory, while other markets, in particular Australia, slumped.

Releases from Apple, Palm and Research In Motion, as well as the HTC G1, pushed converged devices into the public’s eye in North America. But traditional mobile phones were unable to keep pace. Overall, growth in North America remained sound.

For the third quarter, the world’s top manufacturers were Nokia with a 39.4pc share, Samsung with a 17.3pc share, Sony Ericsson with an 8.6pc share, Motorola with an 8.5pc share and LG with a 7.7pc share of the market.

By John Kennedy

Pictured: Nokia 5800


John Kennedy is a journalist who served as editor of Silicon Republic for 17 years