Global Mobile Handset Shipment Grew 17% YoY

(Business News & Technology News, 12 May 2008)

The global mobile-handset market in the first quarter of 2008 appeared to be unaffected by the economic slowdown, with shipments rising by a double-digit percentage compared to the same period in 2007, according to market research firm iSuppli Corp.

Global mobile-handset shipments reached 296 million units in the first quarter of 2008, up 17 percent from 253 million in the first quarter of 2007. While shipments were down 12.4 percent compared to 338 million in the fourth quarter of 2007, this decline represents normal seasonality for the mobile-handset business, which typically undergoes a deceleration following the peak selling period in the fourth quarter. In the first quarter of 2007, for example, shipments decreased by 12.8 percent on a sequential basis.

Looking at the leading worldwide suppliers of mobile handsets, the players occupying the Top-5 ranks remained the same—but there was some change in the order compared to the fourth quarter of 2007.

Nokia faces North American struggles in Q1
Leading handset brand Nokia in the first quarter easily maintained its market dominance, with shipments of 115.5 million units, which gave it a market share of 39 percent. Shipments were up 26.8 percent compared to the first quarter of 2007.

However, the Finnish company's shipments declined by 13.5 percent compared to the fourth quarter of 2007, which was slightly worse than the market average. This caused Nokia's market share to decline by half a percentage point from 39.5 percent in the fourth quarter.

"Nokia managed to defy the seasonal slowdown in the key strategic territory of China, with its shipments to the nation rising 4 percent sequentially to reach 21 million units," says Tina Teng, analyst, wireless communications, for iSuppli. "China in the first quarter of 2008 grew to account for 18.2 percent of Nokia's worldwide shipments, up from 14.5 percent during the same quarter in 2007."

The company in the first quarter also made gains in the Latin American Market, with 63 percent year-on-year growth to 11.9 million units.

"Despite its progress in China, Nokia is still struggling in the North American market," Teng adds. "Nokia's shipments to the region in the first quarter declined to 2.6 million units, a historical low, and a 49 percent decrease from the fourth quarter of 2007."

Motorola remains in free fall
Amid precipitous losses, declining market share and mounting indications of restructuring, U.S.-based Motorola Inc.'s mobile-handset business continued to struggle in the first quarter. The No.-3 ranked handset supplier retained its position with a 9.3 percent share of shipments, down from 12.1 percent in the fourth quarter.

"Although Motorola has tried to maintain a lean operation by instituting workforce cuts across all business units, the company's Mobile Devices group still suffered a disappointing negative 10.5 percent operating profit margin in the first quarter," Teng observes. "Motorola had narrowed its market-share gap with No.-2 Samsung Electronics Co. Ltd. in the fourth quarter. However, Motorola's underperformance in the first quarter cemented the company's rank at No. 3, only slightly ahead of No.-4 ranked, LG Electronics, by 1 percentage point of market share."

Samsung stays solid
Samsung reinforced its No. 2 position in the first quarter of 2008 at the expense of Motorola. Company handset market share rose to 15.6 percent in the first quarter, up from 13.7 percent in the fourth.

The South Korean electronics giant in the first quarter expanded its presence in emerging markets, namely China and India. In developed regions, Samsung also gained traction with its flagship products and the company continued to benefit from refreshing its product portfolio to address all market segments.

Samsung in the second quarter of 2007 passed Motorola to become the No.-2 handset brand and the company widened its market share lead by 6.4 percentage points in the first quarter. Aside from its market-share gain, Samsung also cut down on unnecessary marketing expenses to improve profitability.

Sony Ericsson slips
Sony Ericsson in the first quarter slipped to the fifth spot, down from No. 4 in the fourth quarter. Company shipments fell by 27.6 percent sequentially and rose by a scant 2.3 percent compared to same period in 2007—massively underperforming the market by either measure. Sony Ericsson's global market share declined to 7.5 percent, down from 9.1 percent in the fourth quarter.

The company blamed its weak performance on slow demand for mid-range to high-range handsets, areas which have traditionally been strong for the company.

Sony Ericsson suffered its largest quarterly sequential revenue decline in its home market of Western Europe, with a drop of 38 percent. The company's handset Average Selling Price (ASP) showed a slight sequential decline of 1.6 percent from the first quarter of 2008 in Euros.

However, the company's ASP declined by 9.7 percent compared to the same period in 2007, which can be explained by its moves to expand its product portfolio to lower-cost handsets that address emerging markets.

LG surges
LG Electronics of South Korea managed to outperform the industry in the first quarter, with shipments rising by an industry-leading 3 percent compared to the fourth quarter and by 54.4 percent compared to a year earlier.

The company not only improved its market share to 8.2 percent on unit shipments of 24.4 million, but it also boosted its operating profit to 13.9 percent, up from 8.8 percent last quarter.

The company credited its sales growth to strong results in emerging regions and in its domestic market. LG achieved quarterly sequential growth of 32.4 percent in emerging markets with 6.6 million units. However, European regional sales decelerated with a sequential decline of 29 percent. Despite this, the company scored an 8.2 percent market share in the first quarter of 2008, allowing it to pass Sony Ericsson to be the No. 4 player in the market.

China players emerging
While the top handset brands are in neck-and-neck race, the industry is keeping an eye on emerging players in the market—particularly China's Huawei and ZTE.

ZTE ended the first quarter of 2008 with shipments of 6 million units, up 51.5 percent from the same quarter last year. These two OEMs' products can now be found on U.S. operators' networks, opening up the possibility that the companies could expand their presence in the United States in the coming years.

Click here for more information on iSuppli