We knew it would get worse before it starts to get better, but the first-quarter results that deluged the industry this week pretty much confirmed earlier warnings from industry-leaders such as Nokia and Samsung that the handset market could contract by 10% or more this year.
The worst of the pain should already be over, though, with the top 10 handset vendors reporting combined sales of approximately 213 million. This would represent a 17% decrease from the 257 million devices sold in the fourth quarter of 2008 and a 15% decline from the 251 million units sold a year ago.
Including many yet-to-be confirmed results from the next 10 largest manufacturers - mostly small, regional players - the market shrank by around 15% overall year-on-year to around 250 million devices.
Nokia has already suggested that the second quarter will either see stabilisation or a small degree of positive growth. Most observers agree, if only because the second quarter of the year traditionally yields stronger sales on the back of new product launches. And, with a new iPhone, several new Android devices, the much-awaited Palm Pre, and a new Nokia Nseries device, this belief could well be bourne out.
Nokia’s market share slipped to around 37% this quarter (based on the company’s internal estimates of the size of the market; it could actually be another 1% lower). Nokia device sales fell by 17.6% q-o-q and by 19.3% y-o-y. Former arch-rival Motorola yesterday posted a 23.4% q-o-q and 46.4% y-o-y decline in device shipments, while Sony Ericsson’s decline was almost as steep. Moto’s market share stands at around 6% (own estimates), versus Sony Ericsson’s 5.9%.
Currently, handset demand seems to be polarising into two camps - high-end, high-cost smartphones and low-cost ‘entry’ level devices - as customers are increasingly choosing between a low-cost no-frills device or a fully-featured premium model. This is squeezing the mid-range device market and that is where Motorola and Sony Ericsson - which have both traditionally focused on the mid-tier sector - are feeling the pain most.
The other players in the top 10 are: Samsung (down 18.3% q-o-q and 0.9% y-o-y, but reporting vigorous demand for its mid-range devices, however); LGE (down 12.1% q-o-q and 7.4% y-o-y); Apple (down by 13.1% q-o-q and up by 122.7% y-o-y); and, RIM (up by 23% q-o-q and up by 70% y-o-y).
ZTE of China reportedly sold 10 million devices in Q109, including two million wireless datacards and plug-in devices as well as an unknown number of fixed wireless terminals. Other players include Taiwan-based HTC (2.4 million devices, down by 35% q-o-q and nearly 8% y-o-y).
So, a painful quarter, all told, but with demand for smartphones remaining keen, it does at least seem likely that overall growth will remain within the -10% range already forecast.
Tags: Android, Apple, BlackBerry, entry-level mobile phone, handset sales, handset shipments, HTC, iPhone, LGE, low-cost mobile, low-cost phone, mobile device, mobile handset, mobile phone, Motorola, Nokia, Nseries, Palm, Palm Pre, quarterly results, Research In Motion, RIM, Samsung, smartphone, Sony Ericsson, wireless datacards, wireless dongles, ZTE