Smartphone sales not accelerating fast enough to stem decline of feature phones

14 May 2013

The rise of smartphones is not happening fast enough to stem the decline of feature phones in key markets, with users not upgrading or replacing old devices at a pace the mobile device manufacturers would like to see, new first-quarter figures from Gartner reveal.

Global mobile phone sales totalled 426m in the first quarter of 2013, up slightly by 0.7pc on the previous year.

Worldwide smartphone sales were up 42.9pc to 210m units in the first quarter.

But Gartner has warned that a slowdown of users upgrading to newer devices could strain the total mobile market in 2013. The Asia-Pac region was the only one to demonstrate growth in the first quarter, with sales rising 6.4pc.

“More than 226m mobile phones were sold to end users in Asia/Pacific in the first quarter of 2013, which helped the region increase its share of global mobile phones to 53.1pc year-on-year,” said Anshul Gupta, principal research analyst at Gartner.

“In addition, China saw its mobile phone sales increase 7.5pc in the first quarter of 2013, and its sales represented 25.7pc of global mobile phone sales, up nearly 2 percentage points year-on-year.

“The Chinese and local manufacturers have been exemplary at addressing the demands of buyers by offering affordable devices with optimum features, such as 2.5G (EDGE) instead of 3G in a smartphone. In the smartphone market, local and Chinese manufacturers are making faster inroads as they account for 29pc share in the first quarter of 2013, up from 13.2pc a year ago.”

In the first quarter of 2013, sales of mobile phones in the EMEA region declined 3.6pc. The North America and Latin America’s mobile phone market fell 9.5pc and 3.8pc, respectively, while Japan saw its mobile phone sales drop 7.3pc.

Smartphone branding wars continue

gartner q1 mobile phone sales

Samsung remained in the No. 1 position, growing 13pc in the first quarter of 2013. Its share of smartphones reached 30.8pc, up 3.2 percentage points from the first quarter of 2012.

“We expect the new Galaxy S4 to be very popular despite being more of an evolution than a truly revolutionary device compared to the S3,” said Gupta.

Nokia’s mobile phone share dropped 4.9 percentage points in the first quarter of 2013, mainly due to a steep decline in feature phone sales.

Although Nokia’s Windows Phone sales have sequentially improved, reaching a volume of 5.1m units, Nokia is yet to see high growth in the smartphone segment. Nokia’s position in the smartphone market dropped to No 10 in the first quarter of 2013, from No 8 in the fourth quarter of 2012.

Apple’s sales to end users reached 38.3m units in the first quarter of 2013 as Apple was able to burn some of the inventory built at the end of 2012. The iPhone 5 was rolling out in more markets as the company prepared for Chinese New Year.

China is a key contributor to overall sales for Apple, and Gartner analysts saw evidence of this in the first quarter of 2013, when sales reached close to 7m units in mainland China alone, thanks to the lower price of the iPhone 4.

“Apple is faced with the challenge of being increasingly dependent on the replacement market as its addressable market is capped. The next two quarters will also be challenging, as there are no new products are expected to be coming before the third quarter of 2013,” Gupta said.

LG electronics moved in front of ZTE in the first quarter of 2013 for the No 4 position. ZTE had a weak performance, failing to grow its smartphone sales, selling 7.9m smartphones in the first quarter of 2013, a 5.1pc decline year-on-year.

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