Smartphones drive 18pc growth in global mobile shipments

31 Jan 2011

The worldwide mobile phone market grew 17.9pc in the fourth quarter of 2010, a new quarterly high driven by demand for smartphones.

According to the latest Worldwide Quarterly Mobile Phone Tracker from IDC, vendors shipped 401.4m smartphones in Q4 2010 compared with 340.5m in the same quarter the previous year – up 18.5pc.

The strong quarterly and annual growth comes after a weak 2009, which saw the market decline by 1.6pc. A stronger economy and a wider array of increasingly affordable smartphones helped lift the market to its highest annual growth rate since 2006 when it grew 22.6pc.

“The mobile phone market has the wind behind its sails,” said Kevin Restivo, senior research analyst with IDC’s Worldwide Quarterly Mobile Phone Tracker. “Mobile phone users are eager to swap out older devices for ones that handle data as well as voice, which is driving growth and replacement cycles.”

It’s not just smartphone-focused suppliers that capitalised on the mobile phone market’s renewed growth last year. ZTE, a company that sells primarily lower-cost feature phones in emerging markets, moved into the No 4 position worldwide in the fourth quarter. It is the first quarter the Chinese handset maker finished among IDC’s top 5 vendors.

“Change-up among the Nos 4 and 5 vendors could be a regular occurrence this year,” added Ramon Llamas, senior research analyst with IDC’s Mobile Devices Technology and Trends team.

“Motorola, Research In Motion and Sony Ericsson, all vendors with a tight focus on the fast-growing smartphone market and who had ranked among the top 5 worldwide vendors during 2010, are well within striking distance to move back into the top 5 list.”

Smartphone growth to drive market to 2014

IDC believes the worldwide mobile phone market will be driven largely by smartphone growth through the end of 2014.

“Feature phone users looking to do more with their devices will flock to smartphones in the years ahead,” noted Restivo. “This trend will help to drive the smartphone sub-market to grow 43.7pc year over year in 2011.”

In Western Europe, carrier smartphone promotions motivated more users to scrap their feature phones, resulting in strong smartphone sales.

The iPhone 4, HTC Desire, Nokia N8, Samsung Galaxy S and Blackberry 8520, which were among the region’s top sellers, contributed to the overall market’s growth. Consequently, the feature phones experienced their sharpest decline ever. In CEMA, quarterly volumes breached the 70m unit threshold for the first time, marked by an influx of Chinese and unbranded handsets. Meanwhile, smartphones experienced brisk growth due to falling prices and more Android-powered devices.

The US mobile phone market closed out the year with more vendors becoming more active in this space. Market leaders RIM and Apple maintained a healthy lead, while newcomers Dell, Huawei, Kyocera and Sanyo launched their first smartphones to the US market. In addition, 4G took another step forward with the commercial launch of Verizon Wireless’ LTE network. Similarly, in Canada, the focus was on smartphones. Android-powered devices from multiple players, along with incumbent vendors RIM and Apple, pushed shipment volumes to a new record level.

Top 5 mobile phone vendors

Nokia overall unit volume slipped 2.4pc in the fourth quarter, which the vendor attributed to the “intense competitive” environment and component shortages. The result was lower feature phone shipments. The company did, however, grow smartphone volume by 38pc compared to the same prior-year quarter. Nokia launched the C7 and the C6-01 touchscreen smartphones, as well as the C3 combination touchscreen and QWERTY device in the fourth quarter. Still, smartphone ASPs dropped 16pc on a year-over-year basis.

Samsung reached a new milestone in the fourth quarter, pushing through the 80m unit threshold for the first time in the company’s history and improving its profit margins for the second straight quarter. Driving shipment volumes was the continued success of its Galaxy S smartphones, of which the company sold nearly 10m units worldwide for the year. Similarly, Samsung’s mass market and touchscreen phones earned a strong following in emerging markets.

LG Electronics crossed the 30m unit mark for the quarter, due in part to the success of Optimus One smartphone sales across multiple regions. LG’s smartphone strategy is paying off; the company sold more than a million units in the first month of availability, and newer versions (Optimus 2X, Optimus Black) are expected later this year. Meanwhile, LG’s feature phones comprised the majority of shipments, but an ageing portfolio and lower prices within emerging markets left the company vulnerable to the competition.

ZTE finished the quarter in the No 4 position, with shipments steadily spreading from its home country of China to developing regions, such as Africa and Latin America. ZTE has also recently made inroads in developed markets, such as the US and Western Europe, as well as Japan. While most of its shipments have historically concentrated on entry-level and mid-range devices, some of its recent success is directly attributable to its rapidly expanding smartphone line, such as the Android-based Blade and Racer devices. Meanwhile, its S- and C-series entry-level feature phones provided additional competition within emerging markets.

Apple slipped to the No 5 position, despite a record quarter for unit shipments and the medical leave soon thereafter of CEO Steve Jobs. It was the company’s second straight quarter on IDC’s top 5 list. The iPhone sold particularly well in developed regions of the world, such as North America and Western Europe. Apple, which said it could have sold more iPhones last quarter had it been able to make more, is set to introduce the touchscreen device on Verizon next month.

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