Smartphone Shipments Reach 60 Million Units In 2Q - InformationWeek

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7/22/2010
01:16 PM
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Smartphone Shipments Reach 60 Million Units In 2Q

Strategy Analytics predicts continued upward trend, but "growth ceiling" due to increased competition.

Global smartphone shipments rose a healthy 43% annually to a record 60 million units during the second quarter of 2010, as compared with 42 million in 2Q 2009, according to research firm Strategy Analytics. Driving the upswing were healthy operator subsidies, strong competition between premium-tier vendors, and an increasing range of lower-cost models, the firm said.

"In terms of total volume it was a record quarter, which is not overly surprising, but reaching a new peak was,'' said Neil Mawston, director, wireless device strategies. "Nokia and RIM [Research in Motion] were pretty flat year over year and quarter over quarter."

But while volume, revenue, pricing, and profit margins continued to go up in 2Q, it wasn't as much as in previous quarters, he said. The vendors "are under a little bit more pressure so the growth they're experiencing is not quite as strong, so the market is seeing more competitive pricing,'' he said.

Despite the ongoing challenges, Nokia managed to capture a 40% market share, due to competitive pricing and a huge retail presence, according to the firm. RIM's sales grew abroad and held its share around the 19% level. Apple experienced a mixed quarter, as public criticism of the iPhone antenna design increased, Strategy Analytics said.

Nokia's average smartphone price dropped 21% year over year, which was due in part to the fact that the Finnish-based company is launching new, lower-priced devices, pushing the average price down, said Mawston. Previously, Nokia's devices were priced between $300 to $500 U.S., but are now in the $150 to $500 range, "so you can see how that price banding has increased on the low side."

Overall, Nokia's prices have decreased in the past 10 years, which Mawston called a "double-edged sword." Although pushing their prices down to the mid-tier in pricing has driven up volume, the lower prices could drive down revenue. "So it's not always a perfect balance,'' he said. The other factor, he added, is that the high-end market is "very fierce, driving down prices."

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