Mobile Market Expecting Decline In 2009 - InformationWeek

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07:49 PM

Mobile Market Expecting Decline In 2009

As the global economy worsens, customers may be reluctant to buy new cell phones and smartphones, industry analysts suggest.

The mobile market will not be able to escape the looming global slowdown, and analysts said they expect sales to shrink next year.

According to a poll conducted by Reuters, analysts predict global shipments will dip on average 6.6% next year. Despite the release of high-profile devices like the BlackBerry Storm, analysts see a 5.7% decline for the fourth quarter of 2008.

"A 5-10% decline is the best guess at the moment," Nordea analyst Martti Larjo told Reuters. "This can move either way: if the economy continues to go downward the number could be worse. But while growth is not impossible, it's unlikely."

The major issue is that consumers either don't have the money to spend, or are holding off replacing their phones because of the economic uncertainty. If these predictions hold true, this will be only the second year that the overall mobile phone market sees a contraction since its inception in the 1980s.

The news is not completely unexpected, as industry leader Nokia has issued multiple warnings of slowing sales. The cell phone manufacturing giant is branching out to offer other services like navigation and music to find different avenues for revenue.

"2009 will be challenging for our industry; however, we have a strong, enviable base to build on and I believe we will continue to strengthen our position on many fronts," Nokia CEO Olli-Pekka Kallasvuo said in a statement.

Samsung has also warned that it may feel the squeeze, and Motorola, Sony Ericsson, and LG are looking at tough business months ahead. Most companies have already cut staff to save money, with Motorola notably cutting 3,000 jobs.

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