Worldwide mobile phone sales decline

According to Gartner research, mobile phone sales totalled 269.1 million units in the first quarter of 2009, an 8.6% decrease from the first quarter of 2008. The company however said that smart phone sales surpassed 36.4 million units, a 12.7 per cent increase from the same period last year.

Nokia continued to be the leading supplier of handsets in the mobile phone market, but its market share dropped to 36.2 per cent from 39.1 per cent in the first quarter of 2008. Samsung retained second place and improved its market share, as its sales totalled 51.4 million units. After dropping to the fifth position in the fourth quarter of 2008, Motorola overtook Sony Ericsson to regain fourth place.

Nokia’s worldwide sales reached 97.4 million units in the first quarter of 2009, largely due to reductions in inventory in markets such as Asia/Pacific and Latin America. This was the first time Nokia’s sales dipped below 100 million units since the first quarter of 2007. The real impact of the current market recession was on the average selling price (ASP), which saw an 18 per cent drop year over year. Nokia managed to grow its sales in the smart phone segment by introducing the Nokia 5800 into more regions.

Samsung had a very successful first quarter of 2009. With sales of 51.4 million units, Samsung’s market share grew 4.7 percentage points to 19.1 per cent. It returned to double-digit profitability due to a good product mix. Sales of its Omnia, Tocco and Pixon handsets continued to benefit from strong consumer interest in touch-screen devices. The arrival of the Tocco Ultra Edition late in the first quarter of 2009, and the announcement of its first Android-based product, the i7500, will help Samsung in a highly competitive second half of 2009.

LG sold 26.5 million units in the first quarter of 2009, growing its market share by 1.9 percentage points year on year. The company benefited from a very strong portfolio of touch-screen, messaging and imaging devices. The new LG Arena device showcases a new user interface that demonstrates a positive focus on improving usability. However, Gartner said LG’s biggest challenge is to become competitive in the smart phone segment as services and applications become more important to customers.

Motorola continued to experience significant difficulties even in its home market, but it had a solid quarter with prepaid operators Boost Mobile and Tracfone. It expects worldwide sales of iDEN handsets to be up 50 per cent in 2009 compared with 2008. These factors will help sustain Motorola until it revamps its portfolio in the fourth quarter of 2009. Motorola has committed to Android not only to revamp its position in the second half of 2009, but also to produce long-term performance improvements. Gartner analysts question how Motorola will be able to differentiate its offering when so many players in the mobile device market will be delivering Android-based products at the same time.

Sony Ericsson lost market share compared both with the fourth quarter of 2008 and the first quarter of 2008, with sales of 14.5 million units. While the recession contributed to this decline, a weak product portfolio was also a factor. The product features that helped Sony Ericsson become one of the world’s top vendors — imaging and music — are now too common to serve as a differentiator. Sony Ericsson is late to catch on to the popularity of touch-screen devices and has a limited smart phone portfolio. While its focus on services through Play Now Arena is important, Sony Ericsson needs to ensure its devices include the most desirable applications and features for consumers.

“With inventory-reduction efforts expected to continue in the second quarter of 2009, although to a lesser extent than what we have seen so far, and better-than-expected figures for the first quarter of 2009, we remain confident that overall sales to users for 2009 will remain considerably higher than the sell-in that many vendors are expecting,” Gartner said.

“Device vendors will focus increasingly on smartphones, improved user interfaces and services to differentiate themselves and fuel consumer demand. We maintain our view that sales to users will decrease by about 4 per cent for 2009 compared with 2008, while sell-in will slow to around a 10 per cent decrease.”