Worldwide handset shipments grow 6% in 2008, but decline 5% in 4Q08, Gartner says
The global economic downturn had a significant impact on the handset industry as worldwide mobile phone shipments to end users totalled 314.7 million units in the fourth quarter of 2008, a 4.6% decline from the fourth quarter of 2007, according to Gartner. Manufacturers continued to struggle against low consumer confidence in both emerging and mature markets.
The top-five handset vendors all experienced a decline in shipments in the fourth quarter of 2008. The industry did experience growth for the year, with worldwide mobile phone shipments to end users surpassing 1.22 billion units in 2008, a 6% increase over 2007 shipmets.
"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," said Carolina Milanesi, research director for mobile devices at Gartner. "Consequently, mobile devices in both emerging and developed markets experienced the lowest quarter-on-quarter growth (2%) ever recorded in a fourth quarter."
Shipments into the channel reached 297.3 million in the fourth quarter of 2008, while shipments to users were just short of 314.7 million units. Such a difference was the result of the channel reducing the inventory it held. 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, and we do not expect demand to stabilise before 2010."
"Longer replacement cycles in Western Europe and a very stagnant market in Japan affected sales from the start of the year," Milanesi said. "Other regions, such as Asia-Pacific and Africa, were able to sustain growth as the economic downturn was limited to mature markets in the first half of 2008. From the third quarter of 2008, it became clear that the economic impact was spreading to emerging markets. Sales rapidly deteriorated, making 2008 a challenging year for the entire mobile phone industry."
Vendor overview
Nokia sold nearly 119 million handsets in the fourth quarter of 2008, giving it a market share of 37.7%. 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.
After a blip in the third quarter of 2008, when LG Electronics (LGE) lost its fourth place to Motorola, LGE was able to get back on track and jump two places to number three in the fourth quarter of 2008 worldwide market share. In the fourth quarter, LGE moved into second place in North America, due to its dominant position at Verizon Wireless and very strong sales at TracFone. In India, LGE 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.
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 shipments 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 shipments that were close to 107 million units. The drop in market share on a year-to-year basis (-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.
Regional analysis
In Asia Pacific, quarterly sales of mobile handsets fell sequentially for the first time in the fourth quarter of 2008, as shipments declined by 8.4% over the third quarter of 2008, reaching 107 million units. The drop was mainly due to lower replacement sales.
In Europe, the Middle East, and Africa (EMEA), mobile handsets shipments in the fourth quarter of 2008 grew sequentially by 2.5% to 59.3 million units, bringing the market for the full year to 229.5 million. Shipments in the fourth quarter of 2008 declined 3.5% on year, showing users were more conscious of their spending.
Shipments in Japan in the fourth quarter of 2008 declined 31.4% compared to the fourth quarter of 2007. Although the global economic downturn did affect customer motivation to spend, the major cause of this decline in shipments was due to a rise in retail prices.
Latin America's handset shipments grew sequentially by 9.9% in the fourth quarter of 2008, with nearly 37.4 million units sold during the quarter.
The North American handset market ended 2008 with a record quarter of 49.1 million units to users, roughly comparable to the fourth quarter of 2007 when just under 49 million units were sold. "Smartphones continued to be a driving force for consumers to upgrade their devices," said Hughes De La Vergne, principal analyst for mobile terminals research at Gartner.
Shipments in Western Europe reached 53.4 million units in the fourth quarter of 2008, a good quarter considering the difficult year. This was mainly the result of aggressive stock-level reduction in the channel.
The top-five handset vendors all experienced a decline in shipments in the fourth quarter of 2008. The industry did experience growth for the year, with worldwide mobile phone shipments to end users surpassing 1.22 billion units in 2008, a 6% increase over 2007 shipmets.
"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," said Carolina Milanesi, research director for mobile devices at Gartner. "Consequently, mobile devices in both emerging and developed markets experienced the lowest quarter-on-quarter growth (2%) ever recorded in a fourth quarter."
Shipments into the channel reached 297.3 million in the fourth quarter of 2008, while shipments to users were just short of 314.7 million units. Such a difference was the result of the channel reducing the inventory it held. 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, and we do not expect demand to stabilise before 2010."
"Longer replacement cycles in Western Europe and a very stagnant market in Japan affected sales from the start of the year," Milanesi said. "Other regions, such as Asia-Pacific and Africa, were able to sustain growth as the economic downturn was limited to mature markets in the first half of 2008. From the third quarter of 2008, it became clear that the economic impact was spreading to emerging markets. Sales rapidly deteriorated, making 2008 a challenging year for the entire mobile phone industry."
Vendor overview
Nokia sold nearly 119 million handsets in the fourth quarter of 2008, giving it a market share of 37.7%. 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.
After a blip in the third quarter of 2008, when LG Electronics (LGE) lost its fourth place to Motorola, LGE was able to get back on track and jump two places to number three in the fourth quarter of 2008 worldwide market share. In the fourth quarter, LGE moved into second place in North America, due to its dominant position at Verizon Wireless and very strong sales at TracFone. In India, LGE 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.
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 shipments 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 shipments that were close to 107 million units. The drop in market share on a year-to-year basis (-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.
Regional analysis
In Asia Pacific, quarterly sales of mobile handsets fell sequentially for the first time in the fourth quarter of 2008, as shipments declined by 8.4% over the third quarter of 2008, reaching 107 million units. The drop was mainly due to lower replacement sales.
In Europe, the Middle East, and Africa (EMEA), mobile handsets shipments in the fourth quarter of 2008 grew sequentially by 2.5% to 59.3 million units, bringing the market for the full year to 229.5 million. Shipments in the fourth quarter of 2008 declined 3.5% on year, showing users were more conscious of their spending.
Shipments in Japan in the fourth quarter of 2008 declined 31.4% compared to the fourth quarter of 2007. Although the global economic downturn did affect customer motivation to spend, the major cause of this decline in shipments was due to a rise in retail prices.
Latin America's handset shipments grew sequentially by 9.9% in the fourth quarter of 2008, with nearly 37.4 million units sold during the quarter.
The North American handset market ended 2008 with a record quarter of 49.1 million units to users, roughly comparable to the fourth quarter of 2007 when just under 49 million units were sold. "Smartphones continued to be a driving force for consumers to upgrade their devices," said Hughes De La Vergne, principal analyst for mobile terminals research at Gartner.
Shipments in Western Europe reached 53.4 million units in the fourth quarter of 2008, a good quarter considering the difficult year. This was mainly the result of aggressive stock-level reduction in the channel.
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