Mobile Phone Market Turns Corner in Third Quarter, More Gains Expected in Q4, According to IDC

http://www.businesswire.com/news/home/20091029006634/en

FRAMINGHAM, Mass.--(Business Wire)--
The worldwide mobile phone market saw mild sequential growth in the third
quarter (3Q09), according to IDC`s Worldwide Mobile Phone Tracker. Year-on-year
growth remained negative, but improved from the first half of 2009. Mobile phone
shipments totaled 287.1 million units worldwide in 3Q09, down 6.0% from a year
earlier, but up 5.6% from the second quarter.

"The mobile phone market is showing the first signs of improvement since the
onset of the economic crisis," says Ramon Llamas, senior research analyst with
IDC's Mobile Devices Technology and Trends team. "During the third quarter, we
saw a number of channels promoting older devices at significantly lower prices.
For many, this was enough to spur demand and push volumes higher. Now that we
have moved into the fourth quarter, vendors are setting the stage for further
gains by launching their flagship devices to meet pent-up demand."

"Although some regions are still reeling from problems associated with the
economic crisis, the third quarter served to cleanse the channel while providing
the signs of stability necessary for additional improvement in the fourth
quarter," says Will Stofega, research manager of IDC's Mobile Devices Technology
and Trends team. "Despite the outlook for a slower economic recovery, we think
vendors should increase R&D spending as well as engage in a broad portfolio
review in order to ensure the best competitive stance as the market recovers."

Regional Analysis

* The North American market posted mixed results for 3Q09. The United States
posted positive results, with converged mobile devices and prepaid handsets once
again driving growth. Meanwhile, the Canadian mobile phone market declined for
the third straight quarter despite double-digit converged mobile device growth.
The tepid Canadian economy, shrinking traditional phone segment, and inventory
clear out by the largest service providers led to the market's weaker
three-month performance.
* The Latin American mobile phone market did not experience a strong recovery in
3Q09 as expected. Longer replacement cycles, anemic user demand, and decreased
handset subsidies in select countries all negatively impacted shipment volumes
during the quarter. Challenges are expected still as Mexico, one of the key
countries in Latin America, will experience a 'perfect storm' of tax increases
for telco services, personal taxes, and value-added taxes, which will all
negatively impact handset sales.
* The Western European market showed strong signs of recovery. For the first
time this year, both traditional mobile phone and converged mobile device
shipments increased year over year as well as sequentially. The price erosion
from converged mobile devices and low-end handsets contributed to this vitality
along with the new feature phones from LG and Samsung targeting mid-tier
segments. In CEMA, the market continued to recover from the previous three
months but was still depressed in comparison with a year ago. Nokia lost ground
in converged mobile devices while LG gained on rivals with double-digit growth
as total market volumes continued to decline.
* The third quarter was a weaker than anticipated in Asia/Pacific, with total
shipments down slightly from a year ago. Key emerging markets, including China,
India, and Indonesia, all posted slight declines, signaling that recovery may
take longer than expected. Still, demand for converged mobile devices was
strong, posting double-digit increases year over year.

Top Five Mobile Phone Vendors

Nokia experienced continued pressure during 3Q09 in its Devices and Services
group. The company reported a 20% decrease in revenue, ASP decline, and a
shortage of components across its product portfolio. Even its tight hold on the
converged mobile device category was loosened as the company cited a market
share decrease from 41% to an estimated 35%. This did not keep Nokia from
enhancing its services arm, acquiring cellity, Doplr, and assets from Plum
Ventures.

Samsung reached a new record by shipping more than 60 million units in a single
quarter. This puts the company well within reach of achieving its goal of
shipping 200 million units in 2009. Driving growth was a combination of
touchscreen-enabled and QWERTY messaging devices going into developed markets as
well as key models within emerging markets. Looking to 4Q09, Samsung is poised
to launch strategic converged mobile devices running on Android and Linux.

LG Electronics breached the 30 million unit mark for the first time in its
history. Nearly half of those units sold for less than $100, making them
handsome purchases for carriers. Still, the company was vulnerable in Korea and
North America. Moreover, the lack of converged mobile devices and handsets for
prepaid services prevented LG from capitalizing on growth opportunities in these
segments. LG expects to launch Android and Windows converged mobile devices in
4Q09, while boosting its profile in India and China, improving its competitive
position in the near term.

Sony Ericsson marked Hideki Komiyama's final quarter as president of the
company. During his tenure, Sony Ericsson realized improved operational
efficiencies and cost reduction to increase profitability. However, the lack of
entry-level devices during the economic recession left the company vulnerable as
its competitors were able to keep up with shifting demand. That trend appears to
continue as a list of mid-range and high-end devices are set to launch in 4Q09
and Bert Nordberg, head of Ericsson Silicon Valley, assumes Komiyama's position.

Motorola slipped to fifth place, but in the process the company reported
progress in its restructuring campaign. In addition to reducing its operating
losses for the second consecutive quarter, Motorola announced its much
anticipated Android-powered converged mobile device, the CLIQ/DEXT, as well as
its new DROID. The company announced that it would shift its resources towards
converged mobile devices and away from traditional mobile phones in 2010, a move
the company hopes will improve gross margins and reduce operating losses.

Top Five Mobile Phone Vendors, Shipments, and Market Share, Q3 2009

(Units in Millions)

Vendor 3Q09 Shipment 3Q09 Market 3Q08 Shipment 3Q08 Market Year-on-Year

Volumes
Share
Volumes
Share
Growth
Nokia 108.5 37.8% 117.9 38.6% -8.0%
Samsung 60.2 21.0% 52.0 17.0% 15.9%
LG Electronics 31.6 11.0% 23.0 7.5% 37.4%
Sony Ericsson 14.1 4.9% 25.7 8.4% -45.2%
Motorola 13.6 4.7% 25.4 8.3% -46.4%
Others 59.1 20.6% 61.5 20.1% -3.9%
Total 287.1 100.0% 305.4 100.0% -6.0%

Source: IDC Worldwide Quarterly Mobile Phone Tracker, October 29, 2009

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 45 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
William A. Stofega, 508-988-7845
wstofega@idc.com
or
Michael Shirer, 508-935-4200
press@idc.com

Copyright Business Wire 2009