Mobile handset market shows “solid” Q2 performance

23 Aug 2006

Western Europe’s mobile phone market grew by 7pc year on year in the second quarter with 41.4 million units shipped, IDC has said.

The research firm called Q2 a “solid quarter”, taking into account the fact that steady growth is unsustainable in the traditional mobile phone market. This is because subscriber saturation in most western European countries now stands at over 100pc and operators are keeping a tight rein on costs.

IDC included traditional mobile phones and converged devices in its research and found 41.4 million units shipped between April and June, compared to 38.5 million in the same quarter a year ago.

Nokia’s market share for the quarter rose to 35pc on the back of 11pc growth in shipments. Next was Motorola, with a market share of 17pc and year-on-year shipment increases of 21pc. A raft of new products couldn’t prevent a 16pc drop in volumes for third-placed Samsung as its market share fell to 12pc.

Sony Ericsson showed “healthy” year-on-year growth in Q2 of 11pc, giving it a market share of 11pc. BenQ Siemens increased shipments 17pc year on year in the quarter, to give it a 6pc share of the market.

Jean-Philippe Bouchard, senior research analyst for European Mobile Devices with IDC, said several factors drove growth in Q2. 3G handsets became cheaper and including prepay bundles, this category represented 21pc of total shipments.

“This, combined with the widespread introduction of highly compelling feature phones sporting comprehensive feature sets in innovative form factors, drove healthy renewal cycles in 2006, while the emergence of highly competitive prepay bundles invigorated demand at the low end,” said Bouchard.

IDC noted that converged devices — which offer some data services such as mobile email — had been consistently outperforming traditional mobile phones in recent quarters in terms of growth. However, in the second quarter converged device growth only marginally exceeded that of traditional mobile phones. This was due to operators changing the range of devices they offer, as well as delays in delivery of some handsets.

IDC also interpreted this as a sign that feature phones remain strong in western Europe. “From the perspective of most consumers the advanced capability is still either deemed unnecessary or lies invisible behind considerations such as form factor and multimedia capability,” said Andrew Brown, IDC’s programme manager for European mobile devices and computing.

The result is that consumer-centric converged devices are competing directly with high-end feature phones. IDC said consumers don’t make the distinction between handsets with visible add-ons such as cameras, and smart phones with data synchronisation features.

By Gordon Smith