Home > Worldwide mobile phone market still strong

Worldwide mobile phone market still strong

Supplier News

THE worldwide mobile phone market showed continued strength in the first quarter of 2006 with total shipments of 226.7 million units, representing 26% growth over the same quarter in 2005, according to IDC ’s Worldwide Quarterly Mobile Phone Tracker.

Although the market experienced a sequential decline of 7.3% when compared to the record fourth quarter of 2005, much of this was due to expected seasonality.

“The year-over-year increase indicates that consumer demand in mature markets is still high enough to drive replacement handset purchases. At the same time, continued growth in developing markets around the world is being fuelled by both new subscriptions and replacement purchases,” said Ramon Llamas, research analyst for IDC’s Mobile Markets group.

“The fact that the market is starting the year above the 200 million unit mark in the historically slower first quarter is a good indicator of where the market may be by the end of the year. It also gives vendors some early indications of consumer preferences, which will need to be translated into feature sets and form factors.”

Much of the worldwide growth has been attributed to developing markets, which have not only seen an influx of entry-level devices for first-time users, but an increasing interest in mid-range and higher end devices.

Simon Baker, IDC research analyst in Russia, said the headlong expansion of the country’s handset market has, over the last few years, been driven mainly by first time mobile users in the provinces, who tended to buy cheap phones.

“Though in Russia’s post-communist society of huge income disparities, there has always been demand from the new rich for the latest upmarket models. Replacement purchases in the mass market are now becoming much more significant, and with this trend the average retail price of a handset is increasing,” he said.

“The pace of change continues to be rapid. Despite the continuing Russian economic boom, the handset market started to slow markedly after the middle of 2005. The slowdown can partly be attributed to increased retail prices following a series of crackdowns on import tax evasion, but saturation in demand for mobile services in most big conurbations must also play a part.”

Nokia remains the number one mobile phone vendor in the world. Growing 39.6% year-over-year, the Finnish giant marked yet another quarter having wrapped up more than 30% of the worldwide market. Thanks to the success of its higher-priced models, average selling prices increased, stemming the trend of steady decline for the past several quarters.

US-based Motorola continued its string of quarters of year-over-year growth, this time posting a 60.6% gain to begin 2006. The company continues to leverage its popular RAZR model with different colours and form factors, and its sustained shipments into developing markets helped propel sales and shipments even further.

With shipments increasing 18.4% year over year, Samsung remained firmly in place as the number three worldwide vendor. With shipment improvement to Latin America and Asia-Pacific, the company pushed even closer to the 30 million unit mark. At the same time, while Samsung increased its shipments from a year ago, sales had a slight decrease.

Standing pat in the number four position is LG Electronics , whose first quarter shipments resulted in a 40.5% increase from a year ago. This was the first post-holiday quarter during which the company’s shipments stayed solidly above the 10 million unit mark. The combination of a decrease in shipments, higher marketing expenses and product mix deterioration led to a decrease in sales this quarter for the company, which ultimately resulted in an operating loss.

The 50/50 Sony Ericsson venture began the year with an impressive 41.5% year-over-year improvement, and also marked the first time its post-holiday shipments remained firmly above the 10 million unit mark. At the same time, after trailing LG Electronics by just a 100,000 units last quarter, Sony Ericsson saw the difference increase to 2.3 million units. Three new flagship models were announced for music, imaging and enterprise-focused consumers, and spanned the full spectrum of price points.

Newsletter sign-up

The latest products and news delivered to your inbox