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Popularity of Entry Level Phones Drives 16.3% Growth in Worldwide Mobile Phone Shipments, IDC Finds

Posted on: Thursday, 28 July 2005, 06:00 CDT

The worldwide mobile phone market showed signs of recovery from the first quarter of 2005 due to impressive shipments of entry-level mobile phones to both developing and mature markets. According to IDC's Worldwide Quarterly Mobile Phone Tracker, worldwide mobile phone shipments totaled 188.7 million units in the second quarter, increasing 7.3% sequentially and 16.3% from the same quarter one year ago.

Among the leading vendors, Nokia maintained its leadership, nearly doubling the shipments of its closest competitor and continuing its string of consecutive quarters with market share greater than thirty percent. U.S.-based Motorola finished the quarter solidly in second place, and combined with Nokia, the two represent half the market. In addition, Motorola improved its lead over Samsung by nearly ten million units. Samsung's growth was flat from the previous quarter, but the vendor nearly reached the halfway point of fifty million units in its quest to ship one hundred million units this year. Finishing fourth was LG Electronics, although only three hundred thousand units separate it from fifth place Sony Ericsson. Last quarter, 1.7 million units separated the two vendors.

"The emphasis on entry-level phones demonstrates that vendors are keying in on specific regional and customer needs. Although this helps volumes, it also puts downward pressure on average selling prices and vendor profitability," said Ramon Llamas, research analyst for IDC's Mobility Group. "Despite all the interest and excitement over cutting edge devices, there continues to be a demand for simple voice-only phones that appeal to broad customer segments, even in mature markets like North America."

Within developing markets, vendors are eager to supply phones to reach different customer segments. According to Aloysius Choong, research analyst for IDC Asia/Pacific, "Much has been made about the enormous potential of developing markets, but heavily-populated cities in these countries have already been largely tapped despite the relatively low penetration rates overall. Affordable handsets thus help sustain subscriber growth by reaching into the less-populated cities and rural regions." Similarly, regions like Latin America, the Middle East, and Africa have benefited from vendors' increased production of entry-level phones.

Vendor Highlights

-- Nokia - On the strength of 60.8 million units, the Finnish

giant saw 13.0% sequential growth and strong year-over-year

growth of 33.9%. Early in the quarter Nokia launched its

eye-catching multimedia N-Series phones along with 14 other

models, all targeting different consumer tastes and usage

models.

-- Motorola - Reaching a new company record for quarterly

shipments, the Schaumburg, Illinois-based company posted 18.1%

sequential growth and year-over-year growth of 40.7%, the

highest among the leading vendors. Motorola began shipping 15

new devices, several of which were slight variations on its

tremendously popular RAZR platform.

-- Samsung - The Korean-based company posted flat shipment

levels, decreasing only 0.4% from the previous quarter, while

growing 7.5% from a year ago. Samsung management believes that

shipment and profit growth will come in the second half of

2005 on the strength of its premium devices.

-- LG Electronics - With sequential growth of 9.0% and a

year-over-year growth of 22.2%, LG Electronics maintained

fourth place in global shipments. The company also announced

its plans to license the Palm Operating System, showing

interest in offering a converged mobile device offering, but

stopped short of saying when shipments would begin.

-- Sony Ericsson - The 50/50 venture had the largest sequential

change of the top 5 vendors at 25.5%. Moreover, the company

grew 13.5% from a year ago. The vendor expanded its portfolio

with more high-end devices, including its Sony-branded Walkman

phone. The company continues to close the distance between

itself and LG Electronics.

Top 5 Vendors, Worldwide Mobile Phone Shipments and Market Share, 2Q 2005 (Preliminary) Rank Vendor 2Q 2005 Shipments 2Q Market Share ------- ------------------------- -------------------- --------------- 1 Nokia 60,800,000 32.2% ------- ------------------------- -------------------- --------------- 2 Motorola 33,900,000 18.0% ------- ------------------------- -------------------- --------------- 3 Samsung 24,400,000 12.9% ------- ------------------------- -------------------- --------------- 4 LG Electronics 12,100,000 6.4% ------- ------------------------- -------------------- --------------- 5 Sony Ericsson 11,800,000 6.3% ------- ------------------------- -------------------- --------------- Others 45,700,000 24.2% ------- ------------------------- -------------------- --------------- Total 188,700,000 100.0% ------- ------------------------- -------------------- --------------- Source: IDC, July 27, 2005 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 the IDC Worldwide Quarterly Mobile Phone Tracker, please contact Kathy Nagamine at (650) 350-6423 or email sales@idc.com.

About IDC

IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. Additional information can be found at 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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