Samsung Bucks Trend, Ups 1Q Mobile Phone Shipments - InformationWeek

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Samsung Bucks Trend, Ups 1Q Mobile Phone Shipments

The company increased market share primarily through rising sales of low-end, inexpensive mobile phones.

Samsung Electronics showed respectable growth in mobile phone shipments in the first quarter, while the remaining top five vendors posted decreases, a market research firm said Monday.

Overall, mobile phone shipments during the seasonally slow quarter fell by 12.8% from the fourth quarter to 253 million units, which was 13.5% more than the first quarter of 2006, industry analyst firm iSuppli said. Samsung reported a quarter-to-quarter increase of 9.1% to 34.8 million units.

Samsung's success was mainly due to strong sales growth in Asia, iSuppli analyst Tina Teng said. In Asia, Samsung shipments soared by 28% over the fourth quarter, and 57% compared with the first quarter of 2006. As a result, Samsung achieved a 13.9% market share in the first quarter of this year, its highest level since the second quarter of 2005.

Not all the news for Samsung was good, however. The company increased market share primarily through rising sales of low-end, inexpensive mobile phones. As a result, the company's average selling price declined by 10% during the quarter.

Motorola posted the worst results among the top five vendors, as shipments fell by 30.9% in the quarter to 45.4 million units. Samsung and fellow South Korean mobile phone maker LG both saw market-share advances at Motorola's expense.

Teng, however, noted that Motorola's market share and volume declines might have been intentional. While shipments were down, Motorola's average selling price was up 0.41% to $119.20, an indication that it was less interested in grabbing market share with low-end phones that carry less profit. Indeed, Motorola officials have said that the company's pursuit in the past of market share has hurt profits.

"Recent acquisitions, shifts in product mix, and the slight increase in the ASP highlight Motorola's strategy of putting margin improvement before rapid market share expansion," Teng said in a statement.

Of the remaining top five vendors, No. 1 Nokia shipped 91 million units, a 13.6% drop from the fourth quarter; Sony Ericsson, 21.8 million units, a decline of 16.2%; and LG Electronics, 15.8 million, a drop of 6.5%. Market share for the five vendors was: Nokia, 36%; Motorola, 17.9%; Samsung, 13.8%; Sony Ericsson, 8.6%; and LG, 6.2%.

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