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Worldwide Mobile Phone Market Exhibits Strong Year-Over-Year Growth on Continued Strength of Developing Markets, IDC Finds

Posted on: Thursday, 20 April 2006, 12:00 CDT

The worldwide mobile phone market showed continued strength in the first quarter of 2006 with total shipments of 226.7 million units, representing 26.0% growth over the same quarter in 2005, according to IDC's Worldwide Quarterly Mobile Phone Tracker. Although the market experienced a sequential decline of 7.3% when compared to the record fourth quarter of 2005, much of this was due to expected seasonality.

"The year-over-year increase indicates that consumer demand in mature markets is still high enough to drive replacement handset purchases. At the same time, continued growth in developing markets around the world is being fueled by both new subscriptions and replacement purchases," said Ramon Llamas, research analyst for IDC's Mobile Markets group. "The fact that the market is starting the year above the two hundred million unit mark in the historically slower first quarter is a good indicator of where the market may be by the end of the year. It also gives vendors some early indications of consumer preferences, which will need to be translated into feature sets and form factors."

Much of the worldwide growth has been attributed to developing markets, which have not only seen an influx of entry-level devices for first-time users, but an increasing interest in mid-range and higher end devices. Simon Baker, research analyst in Russia, explains: "The headlong expansion of the Russian handset market has, over the last few years, been driven mainly by first time mobile users in the provinces, who tended to buy cheap phones, though in Russia's post-Communist society of huge income disparities, there has always been demand from the new rich for the latest upmarket models. Replacement purchases in the mass market are now becoming much more significant, and with this trend the average retail price of a handset is increasing.

"The pace of change continues to be rapid: despite the continuing Russian economic boom, the handset market started to slow markedly after the middle of 2005," Baker adds. "The slowdown can partly be attributed to increased retail prices following a series of crackdowns on import tax evasion, but saturation in demand for mobile services in most big conurbations must also play a part.

"Now established as one of the most important handset markets in Europe, Russia is fast beginning to mirror other large European markets in an unexpected way - maturity."

1Q06 Vendor Highlights

-- Nokia. The Finnish giant started 2006 much in the same way it

closed out 2006 - as the undisputed leader of the worldwide

mobile phone market. Growing 39.6% year over year, Nokia

marked yet another quarter having wrapped up more than thirty

percent of the worldwide market. Thanks to the success of its

higher-priced models, average selling prices increased,

stemming the trend of steady decline for the past several

quarters.

-- Motorola. The U.S.-based company continued its string of

quarters of year-over-year growth, this time posting a 60.6%

gain to begin 2006. Motorola continues to leverage its

tremendously popular RAZR model with different colors and form

factors in the PEBL and SLVR, and its sustained shipments into

developing markets helped propel sales and shipments even

further.

-- Samsung. With shipments increasing 18.4% year over year,

Samsung remained firmly in place as the number three worldwide

vendor. With shipment improvement to Latin America and

Asia/Pacific, the company pushed even closer to the thirty

million unit mark. At the same time, while Samsung increased

its shipments from a year ago, sales had a slight decrease.

-- LG Electronics. Standing pat in the number four position is LG

Electronics, whose first quarter shipments resulted in a 40.5%

increase from a year ago. This was the first post-holiday

quarter during which LG Electronics' shipments stayed solidly

above the ten million unit mark. The combination of a decrease

in shipments, higher marketing expenses, and product mix

deterioration led to a decrease in sales this quarter for the

company, which ultimately resulted in an operating loss.

-- Sony Ericsson. The 50/50 venture began the year with an

impressive 41.5% year-over-year improvement, and also marked

the first time that Sony Ericsson's post-holiday shipments

remained firmly above the ten million unit mark. At the same

time, after trailing LG Electronics by just a hundred thousand

units last quarter, Sony Ericsson saw the difference increase

to 2.3 million units. Three new flagship models were announced

for music, imaging, and enterprise-focused consumers, and

spanned the full spectrum of price points.

Top 5 Vendors, Worldwide Mobile Phone Shipments and Market Share Q1 2006 Q1 2005 Q1 2006 Market Q1 2005 Market 1Q06/1Q05 Vendor Shipments Share Shipments Share Growth ---------------------------------------------------------------------- Nokia 75,100,000 33.1% 53,800,000 29.9% 39.6% Motorola 46,100,000 20.3% 28,700,000 16.0% 60.6% Samsung 29,000,000 12.8% 24,500,000 13.6% 18.4% LG Electronics 15,600,000 6.9% 11,100,000 6.2% 40.5% Sony Ericsson 13,300,000 5.9% 9,400,000 5.2% 41.5% Others 47,600,000 21.0% 52,400,000 29.1% -9.2% TOTAL 226,700,000 100.0% 179,900,000 100.0% 26.0% ---------------------------------------------------------------------- Source: IDC Worldwide Quarterly Mobile Phone Tracker, 20 April 2006 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. Over 850 IDC analysts in 50 countries provide global, regional, and local expertise on technology and industry opportunities and trends. For more than 42 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.

Source: Business Wire

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