Advanced Features in High-End Phones Help Drive Worldwide Mobile Phone Shipments...

Advanced Features in High-End Phones Help Drive Worldwide Mobile Phone Shipments to 15.3% Growth in Second Quarter, Says IDC

FRAMINGHAM, Mass.--(Business Wire)--
The worldwide mobile phone market continued solid double-digit
growth in the second quarter (2Q08) as competition in high-end devices
heated up. According to IDC's Worldwide Mobile Phone Tracker, vendors
shipped a total of 306.0 million units, an increase of 5.6% from the
289.7 million units shipped during the previous quarter and up 15.3%
from the 265.4 million units shipped during 2Q07. Total shipments for
the quarter were in line with IDC's expectations, even as vendors
cited economic challenges and changing demands within key regions.

"Since the start of the year, vendors have been wary of the
potential decrease in demand for mobile phones," says Ramon T. Llamas,
senior research analyst with IDC's Mobile Devices Technology and
Trends Team. "That has not stopped vendors from experimenting with and
releasing a host of mid-range and high-end devices with GPS,
touchscreen, and multimedia. This also goes for hotly contested
emerging markets, where vendors are introducing phones that offer
features in addition to voice telephony. Reception towards these
devices has been warm, and as we head into the holiday quarter, demand
for these and other devices will no doubt increase."

These design changes are escalating competition between devices in
a new way. Converged mobile devices, also know to the industry as
smartphones, have typically been the category of handsets
incorporating higher-end features such as GPS and touchscreen.
However, these features are quickly moving onto handsets further down
the food chain - feature phones.

"Smartphones are still seeing growth rates hovering around 40.0%
year-over-year, while the rest of the industry is growing at roughly
10.0%," said Ryan Reith, senior research analyst with IDC's Mobile
Phone Tracker. "However, grouping 'the rest of the handsets' into one
category is doing the industry no justice. The rise of the feature
phone has created a battle at the high-end of the market, with the
main difference between smartphone and feature phone being the
high-level operating system. We expect the competition at the high-end
will help drive growth within the market and help move volume to
higher-end devices."

Regional Analysis

-- Despite rising food and oil prices, mobile phone growth in the
emerging markets of Asia/Pacific continued to be robust. Nokia
reported its highest-ever shipments in India amid subscriber
increases in rural areas, while domestic phone makers
benefited in China. Pre-empting the threat of the (then)
imminent iPhone 3G, converged mobile device vendors in the
region, including HP and MWG, also took the opportunity to
launch their own offerings in 2Q08.

-- Volumes in Europe, the Middle East and Africa (EMEA) rose
modestly compared with the first quarter, and saw healthy
growth from a year ago. In Western Europe, LG and Samsung
increased market share with new line ups of medium and low-end
products, while in the emerging markets of Middle East and
Africa growth continued to be driven by sales of Nokia's entry
level phones.

-- In North America, mobile phone shipments experienced a healthy
lift from last quarter, with vendors introducing a number of
feature phones ahead of the much anticipated iPhone 3G. In
many cases, these offered touchscreen, music, or GPS. At the
same time, the converged mobile device market grew faster than
the overall mobile phone market and accounted for nearly a
fifth of total mobile phone shipments.

-- In Latin America, mobile phone shipments continued to show
positive growth. With the recent and continuous migration to
newer networks and new services offered by carriers throughout
the region, the main strategy for vendors and carriers in 2008
has been to promote and convince current users to migrate from
low-end phones to more complex feature phones. In response,
vendors launched a number of new models during the quarter.

Top Five Mobile Phone Vendors

Nokia posted solid growth of 21.0% from a year ago, although this
is down from the 26% gains in the previous three quarters. Nokia
managed impressive operating margins for the quarter and boosted
market share 39.9% worldwide. The company's relentless focus on and
ability to meet demand within emerging markets helped propel shipment
volumes forward as nearly a third of its total volumes worldwide came
from its 1200 and 1208 models. Meanwhile, Nokia's Nseries, Eseries,
and feature phones generated the most revenue and profit for the
company. Even with more than twenty new devices announced during the
first half of the year, more models are expected in the second half.

Samsung maintained its position as the No. 2 handset vendor
worldwide. Year-on-year growth of 22% was quite strong, even though it
was slower than in recent quarters and meant a slight decline in
volume from the previous quarter. Affecting the company's performance
the most was a combination of greater competition for mid-range and
high-end phones, economic slowdown, and weak 2Q demand. Compounding
Samsung's challenges were increased marketing expenditures, which
pushed its operating margins down to 12.8%. This, however, did not
prevent the company from enjoying success with its own high-end
devices, including the Soul, F480, and the launch of the M800.

Motorola weathered another quarter of challenges, with another top
executive leaving the company, no new leader for its Mobile Devices
division despite several names being rumored to take the position, and
another quarter of operating losses. Still, Motorola recorded a slight
increase in shipments from the previous quarter, enough to stay ahead
of LG Electronics for the No. 3 spot worldwide. New to the company's
portfolio were a series of feature phones, including the ROKR E8, two
new MING devices, and several new 3G devices.

LG Electronics reinforced its position as the No. 4 mobile phone
vendor worldwide with shipments reaching a new record high.
Accompanying this were success in key emerging markets, well-managed
costs, and a warm reception towards its premium models, including the
Secret, Venus, and Viewty models. Taken together, LG enjoyed a slight
improvement in its operating margin from the previous quarter. Looking
ahead, the company hopes that stronger marketing and an ability to
respond proactively to the market will insulate it from potential
market-wide ASP declines later this year.

Sony Ericsson sustained another tough quarter, citing soft demand
in Europe, increased price competition, and a product portfolio that
did not meet expectations. But even its less favorable product mix did
not prevent the company from announcing and shipping a number of new
Cyber-shot and Walkman-branded handsets to the market. The company saw
its operating margin and volume growth slip into negative territory.
To combat this, CEO Hideki Komiyama announced plans to realign the
company's operations and resources, which include reducing company
headcount.

Top Five Mobile Phone Vendors, Shipments, and Market Share, Q2
2008 (Units in Millions)

-0-
*T
Vendor Q208 Q208 Q207 Q207 2Q08/2Q07
Shipments Market Shipments Market Growth
Share Share
Nokia 122.0 39.9% 100.8 38.0% 21.0%
Samsung 45.7 14.9% 37.4 14.1% 22.2%
Motorola 28.1 9.2% 35.5 13.4% -20.8%
LG Electronics 27.7 9.1% 19.1 7.2% 45.0%
Sony Ericsson 24.4 8.0% 24.9 9.4% -2.0%
Others 58.1 19.0% 47.7 18.0% 21.8%
Total 306.0 100.0% 265.4 100.0% 15.3%
*T

Source: IDC Worldwide Quarterly Mobile Phone Tracker, July 30,
2008

Note: Vendor shipments are branded shipments and exclude OEM sales
for all vendors.

Mobile Phones - These small, battery-powered, voice-centric
devices utilize operator-provided cellular/PCS air interfaces for
voice communication. They are designed primarily, in both form factor
and feature set, for a compelling mobile telephony experience, but may
also include text-messaging capability. Mobile phones may include a
headset jack for hands-free operation as well as a variety of
features, such as personal information management, multimedia, games,
or office applications. Mobile phones exist at all points along the
form factor, price point, and feature set continua. Mobile phones that
combine voice communications capabilities with pen or keypad handheld
data features are tracked within the Converged Devices category.

For more information about IDC's Worldwide Quarterly Mobile Phone
Tracker, please contact Kathy Nagamine at 650-350-6423 or
knagamine@idc.com.

About IDC

IDC is the premier global provider of market intelligence,
advisory services, and events for the information technology,
telecommunications, and consumer technology markets. IDC helps IT
professionals, business executives, and the investment community make
fact-based decisions on technology purchases and business strategy.
More than 1,000 IDC analysts provide global, regional, and local
expertise on technology and industry opportunities and trends in over
110 countries worldwide. For more than 44 years, IDC has provided
strategic insights to help our clients achieve their key business
objectives. IDC is a subsidiary of IDG, the world's leading technology
media, research, and events company. You can learn more about IDC by
visiting www.idc.com.

All product and company names may be trademarks or registered
trademarks of their respective holders.

IDC
Ramon T. Llamas, 508-935-4736
rllamas@idc.com
or
Ryan Reith, 508-988-7902
rreith@idc.com

Copyright Business Wire 2008