In Asia-Pacific, quarterly sales of mobile handsets fell sequentially for the first time in Q408.
The global economic downturn had a significant impact on the mobile phone industry as worldwide mobile phone sales to end users totalled 314.7 million units in the fourth quarter of 2008 — a 4.6 per cent decline from the fourth quarter of 2007, according to reseach firm Gartner. Manufacturers continued to struggle against low consumer confidence in both emerging and mature markets.
In the Asia-Pacific region, too, quarterly sales of mobile handsets fell sequentially for the first time in the fourth quarter of 2008, as sales declined by 8.4 per cent over the third quarter of 2008, reaching 107 million units. The drop was mainly due to lower replacement sales.
“Sales of mobile devices to first-time buyers continued to grow, with net-new mobile subscribers declining only marginally, from 81 million in the third quarter of 2008 to 79 million in the fourth quarter of 2008,” said Anshul Gupta, principal analyst for Gartner, based in Mumbai. However, weak consumer confidence resulted in poor replacement sales, as consumers postponed their replacement decisions.
Mobile phones have traditionally been one of consumers’ preferred presents for Christmas. However, in the fourth quarter of 2008 consumers were concerned about taking on the contract associated with the most attractive products on the market, according to Carolina Milanesi, research director for mobile devices at Gartner, based in Egham, UK.
The top five mobile phone vendors all experienced a decline in sales in the fourth quarter of 2008. The industry did experience growth for the year, though, with worldwide mobile phone sales to end users surpassing 1.22 billion units in 2008 — a 6 per cent increase over 2007 sales.
Nokia sold nearly 119 million mobile phones in the fourth quarter of 2008, giving it a market share of 37.7 per cent. This was a decline both sequentially and year-on-year. With sales in emerging markets slowing due to the economic environment, Nokia felt more pressure in the second half of 2008. Nokia’s delay in rolling out products with touchscreen functionality caused its smartphone sales to suffer.
Samsung finished a strong year with a good performance. In the fourth quarter of 2008, Samsung was able to grow share sequentially and also year on year, as products such as the Tocco, Innov8 and Omnia continued to drive sales in regions such as Western Europe and Asia/Pacific. Samsung’s quick response to demand for touch interfaces was the main reason for its success.
| Worldwide Mobile Terminal Sales to End Users in 4Q08 (Thousands of Units) | ||||
| Company | 4Q08 Sales | 4Q08 Market Share(%) | 4Q07 Sales | 4Q07 Market Share (%) |
| Nokia | 118791.0 | 37.7 | 133194.4 | 40.4 |
| Samsung | 57517.9 | 18.3 | 44353.1 | 13.4 |
| LG | 28140.9 | 8.9 | 23545.0 | 7.1 |
| Sony Ericsson | 23554.1 | 7.5 | 29848.8 | 9.0 |
| Motorola | 21700.1 | 6.9 | 39291.0 | 11.9 |
| Others | 65003.8 | 20.7 | 59822.4 | 18.2 |
| TOTAL | 314707.8 | 100.0 | 330054.7 | 100.0 |
After a blip in the third quarter of 2008, when LG lost its fourth place to Motorola, LG was able to get back on track and jump two places to No. 3 in the fourth quarter of 2008 worldwide market share. In the fourth quarter, LG moved into second place in North America, due to its dominant position at Verizon Wireless and very strong sales at TracFone. In India, LG got back into Reliance Communication after issues it had in the third quarter of 2008, and it was actually able to burn some inventory during the quarter.
| Worldwide Mobile Terminal Sales to End-Users in 2008 (Thousands of Units) | ||||
| Company | 2008 Sales | 2008 Market Share(%) | 2007 Sales | 2007 Market Share (%) |
| Nokia |
472315.0 | |||
38.6
435453.1
37.8
199182.0
16.3
154540.7
13.4
106590.0
8.7
164307.0
14.3
102555.4
8.4
78576.3
6.8
93414.5
7.6
101358.4
8.8
248189.0
20.4
218604.3
18.9
1222245.2
100.0
1152839.8
100.0
Sony Ericsson was unable to hold on to the third position in the worldwide ranking, which it reached in the third quarter of 2008. In the fourth quarter, its sales dropped to 23.6 million units, putting it in fourth place. Not only did Sony Ericsson fail to reduce stock levels in the fourth quarter, it also built a slight inventory. As both music players and cameras have become more widespread in the competitors’ portfolios, it has been more difficult for Sony Ericsson’s Walkman and Cybershot product ranges to stand out. Lack of pure touchscreen devices also impacted overall performance in 2008.
Motorola’s performance worsened in the fourth quarter of 2008, when it slipped to fifth place in the worldwide ranking. Some reductions in inventory helped Motorola finish the year in third position with sales that were close to 107 million units. The drop in market share on a year-to-year basis (minus 5.6 percentage points) is a clear indication of the troubled times the vendor has been facing. Lack of compelling products throughout the portfolio has made it impossible for Motorola to slow down its sales decline. It has been losing share in all key regions because it lacks 3G products and touchscreen devices, and has poor support for “hot” features, such as GPS.
Sales into the channel reached 297.3 million in the fourth quarter of 2008, while sales to users were just short of 314.7 million units. This is the biggest difference recorded since Gartner started measuring the market in 2001. Such a difference was the result of the channel reducing the inventory it holds. Low consumer confidence is forcing distributors and retailers to limit the volume they hold in stock, because the channel cannot afford significant capital investment.
“Efforts to reduce inventory will intensify in the first quarter of 2009 and continue into the second quarter of 2009. In the second half of 2009, the channel will have to start re-stocking and this will help sell-in volumes,” said Milanesi. “This will not mark the start of a market recovery — we do not expect demand to stabilise before 2010.”
