August 22, 2007 / 11:04 PM / 12 years ago

Motorola's woes still benefit competitors: Gartner

HELSINKI (Reuters) - Mobile phone maker Motorola MOT.N continued to suffer from weak demand in April-July due to its old phone models, giving competitors a chance to gain market share, research firm Gartner said on Thursday.

Gartner said 270.9 million phones were sold in April-June, up 17.4 percent year-on-year, boosted by 40.7 percent growth in the Asia-Pacific region. Western Europe and North America saw 11 percent and 7 percent annual growth, respectively.

But it cut its forecast for the global handset sales in 2007 to 1.13 billion phones from the 1.15 billion it forecast in May because April-June sales were not as strong as it expected. The figure compares with an average market growth forecast of 1.11 million in a Reuters poll of analysts published at the end of July.

Market leader Nokia NOK1V.HE sold almost 99.95 million phones in the second quarter, for a 36.9 percent market share worldwide compared with 33.7 percent a year ago.

Carolina Milanesi, research director for mobile devices at Gartner, expects Nokia to continue to gain market share in the second half because Motorola is not as aggressive pushing cheaper mobile phones that sell well in emerging markets.

Although Motorola continued to suffer from weak demand for its older phone models, it stayed ahead of South Korea’s Samsung Electronics Co Ltd (005930.KS).

Motorola’s sold 39.5 million phones and had a market share of 14.6 percent, compared with 21.9 percent a year ago. Samsung’s market share was 13.4 percent.

Milanesi said she was eager to see how Motorola and Samsung would perform in the second half of the year.

“Their volumes and market shares are very, very close. It could well be that Samsung overtakes Motorola if it continues to be weak.”

But Milanesi said it would take some time for Motorola to rebuild its phone portfolio.

“I am not expecting to see Motorola with 20 percent market share before mid-2008,” she added.

Gartner said Motorola burned in the second quarter inventories it gained in the first quarter, while Samsung pushed too many phones in to the sales channel in the second quarter and gained inventories.

A wider selection of phones boosted Sony Ericsson’s (6758.T)(ERICb.ST) market share to 9 percent in the quarter from 6.6 percent a year ago, while LG Electronics Inc (066570.KS) had 6.8 percent share of the market, up from 6.3 percent a year ago.

“The gap between LG and Sony Ericsson is still there,” Milanesi added.

Reporting by Terhi Kinnunen

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