iPhone hype masks major mobile industry shift

3 Aug 2007

All the razzmatazz surrounding Apple’s debut into the mobile industry with its iPhone device in the second quarter masked the decline of Motorola in the world shipment rankings as the company was moved from the No 2 spot by an aggressive and ambitious Samsung.

Mobile handset vendors shipped 272.7 million devices in the second quarter of this year, up 6.9pc on the first quarter and 6.5pc on the same quarter last year, says analyst IDC.

However, the growth is significantly slower than the 22pc year-on-year growth witnessed in 2006.

IDC attributes the slower growth to the high market penetration levels in mature regions, which limits replacement.

Much of new growth comes from emerging markets where new subscribers are joining all the time.

Samsung beat Motorola for the No 2 spot in global market share after four years of stable rankings.

Motorola’s news of dismal handset shipments of 35.5 million in the first quarter coincided with Samsung’s revelation of record shipments of 37.4 million devices in its fiscal fourth quarter.

Nokia held the lead with 100.8 million devices shipped during the first half of the year.

But all of this risked being eclipsed by the onset of Apple’s new iPhone in the second quarter.

“While the shift in the industry vendor rankings is certainly of importance, perhaps the big story of the quarter was Apple’s debut as a mobile phone vendor with its launch of the iPhone,” says Shiv Bakhshi, director of worldwide mobile device research at IDC.

“Even though limited in the number of units shipped, the iPhone is likely to have a disproportionately large impact on the industry,” says Bakhshi. “For one, it has pushed the envelope on industrial design and user interfaces for all vendors. For another, it could forever alter the structural relationship between device vendors and mobile operators who have traditionally controlled the mobile environment, especially in the US.

“Equally important, the unparalleled hype surrounding the iPhone could lift mobile devices out of a utilitarian frame of reference and place them squarely in the fashion frame of reference, potentially raising ASPs for the entire industry. For the present, however, it seems at least to have raised the profile for all converged mobile devices,” Bakhshi added.

By John Kennedy