Mobile Phone Market Sees Double-Digit Growth - InformationWeek

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7/31/2008
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Mobile Phone Market Sees Double-Digit Growth

Vendors shipped 306 million handsets during the second quarter, a 15% increase from the year before, according to IDC.

Despite a slowing economy, the global mobile phone market had solid double-digit growth in the second quarter, according to new data from IDC.

The report, "IDC Worldwide Quarterly Mobile Phone Tracker," said vendors shipped a total of 306 million units, a 15% increase from the same period a year earlier. This growth was spurred by increased competition in the high-end market as well as increased demand in emerging regions.

"Since the start of the year, vendors have been wary of the potential decrease in demand for mobile phones," said Ramon Llames, a senior research analyst at IDC, in a statement. "That has not stopped vendors from experimenting with and releasing a host of mid-range and high-end devices with GPS, touchscreen, and multimedia. This also goes for hotly contested emerging markets, where vendors are introducing phones that offer features in addition to voice telephony."

The report also said that smartphones are seeing growth rates near 40% year-over-year, while the rest of the industry is growing at roughly 10%. But the line between a smartphone and a feature phone is quickly blurring, and the research firm expects to see more mid-range handsets with higher-end capabilities.

By region, the Asia/Pacific area had robust growth due to rapid adoption of phones in markets like China and India. Europe saw a soft demand for high-end devices, and the Middle East and Africa had a high demand for entry-level phones.

In North America, many vendors introduced a host of feature-packed phones in advance of the iPhone 3G, and this provided a healthy lift in shipments. The Latin America market also continues to show positive growth, as more users are migrating from entry-level devices to feature phones.

The research firm also took a look at the top five mobile phone vendors. Industry-leading Nokia shipped 122 million handsets during the period, and IDC said "the company's relentless focus on and ability to meet demand within emerging markets helped propel shipment volumes forward."

Samsung maintained its second-place position, but did see a slight decline in shipments from the previous quarter. Affecting the company's performance was greater competition in the mid-range and high-end phones, increased marketing costs, and the overall economic slowdown.

Motorola retained the number three slot, and managed to post a small profit for the quarter. LG Electronics was nipping at Motorola's heels, thanks to its success in key emerging markets, and a warm reception to high-end models like the Venus.

Sony Ericsson had a tough quarter due to sluggish demand in Europe and increased price competition. The company announced it will realign its operations and resources, including cutting 2,000 jobs.

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