Despite increased evidence of saturation in many Western European markets, sales of 3G handsets grew by 11pc over last year to reach 40.7m units sold, IDC said last night. Despite healthy volume growth, however, the report says increasing operators’ scrutiny of handsets is beginning to have a negative impact on handset vendors’ ability to innovate.
“Although mounting saturation in subscriber growth across Europe is increasingly inhibiting handset shipment growth, the market in 1Q06 matched the growth rate exhibited in the opening quarter of 2005 despite a lack of impetus commonly provided by new handset launches,” said Geoff Blaber, senior research analyst, European Mobile Devices at IDC.
“Mounting consumer migration towards WCDMA devices driven by competitive service pricing and ASP declines, combined with highly aggressive handset subsidies across operator portfolios, was a key market performance driver in 1Q06.”
However, despite relatively healthy unit volumes, intense vendor competition, ASP (application service provider) declines, and sustained scrutiny of handset portfolios and costs by mobile operators continued to have a negative impact on vendor profit margins.
Furthermore, downsizing of portfolios meant the top three vendors accounted for almost 70pc of all traditional mobile phones shipped, compared to 62pc in 2005.
“Operators’ scrutiny of handset portfolios is now beginning to significantly impact vendors without the capability and resources to meet stringent operator demands across multiple product lines with regard to software and hardware customization, user interface and form factor design,” said Andrew Brown, program manager, European Mobile Devices at IDC.
“Such vendors need to focus R&D towards operator requirements by integrating such components to produce closely positioned products that serve very specific segments.”
With increased carrier demand for highly customizable devices and higher ARPU (average revenue per user) driving solutions also meant that converged devices increased their proportion of the total market to 7pc in 1Q06 from 5pc in the opening quarter of 2005 as consumers continued to migrate predominantly towards S60 devices from high-end feature phones.
“Strong anticipated converged device growth in both consumer and enterprise segments, combined with the introduction of new form factors and technology improvements, particularly with regard to imaging, will drive a healthy renewal market in 2006,” said Jean-Philippe Bouchard, senior research analyst, European Mobile Devices at IDC. “Consequently, IDC forecasts total mobile phone market growth of just under 10pc with shipments expected to exceed 185m units.”
In terms of vendor performance Nokia increased its share of the 3G handset market to 34pc, followed by Motorola with a 18pc of the Western European market, Samsung with 17pc, Sony Ericsson with 9pc and BenQ Siemens with 6pc market share.
Nokia had the highest number of 3G handset shipments with 13.8m units shipped, followed by Motorola with 7.3m, Samsung with 7.1m units, Sony Ericsson with 3.7m units and BenQ Siemens with 2.4m units shipped. Other manufacturers shipped 6.3m units and had a 16pc share of the overall market.
By John Kennedy
