The mobile phone market felt the economic situation's impact on sales in Q1, forcing the typically down March quarter's shipments to fall more than usual. Still, the market saw support from the smartphone segment, which encouraged growth for some of the industry's players in the quarter and is expected to continue to remain a bright spot.
According to IDC's Worldwide Quarterly Mobile Phone Tracker, vendors shipped a total of 244.8 million units in Q1, approximately 15.8 percent lower than the 290.8 million units shipped during Q1 2008. Research from Strategy Analytics put shipment estimates in the same ballpark. According to the company, global mobile handset shipments fell 13 percent year-over-year to 244.5 million units in Q1 from 282.4 million units shipped in Q1 2008.
"A global economic downturn and cautious de-stocking by retailers caused the slowdown," Alex Spektor, analyst at Strategy Analytics, said in a statement today. "Our records indicate that Q1 2009 represented the fastest ever decline in annual shipment growth since the modern cell phone industry began in 1983.”
IDC noted that the year-over-year decline highlights just how much the economic recession has affected all industries, including the wireless market. Indeed, Motorola this week reported an increase in net loss, ST-Ericsson said it would cut 1,200 jobs, and handset vendor Nokia announced 450 layoffs on plans to stream line investments, putting an emphasis on third party partners.
"The market continues to adapt to the new economic reality with both vendors and retailers exercising caution to remain profitable," Ramon Llamas, senior research analyst with IDC's mobile devices technology and trends team, said in a separate statement today. "In some cases, this has meant holding less inventory, or even reducing headcount. Fortunately, new features and demand for phones will help the market resist the financial pressure."
IDC continued to report that while the overall market dropped 15.8 percent in Q1, shipments of converged mobile devices—or smartphones—continued to grow year on year at 4 percent. IDC said that mobile operators have become progressively more open to raising subsidies within this segment as dependence on data revenue has increased as a result of reduced consumer demand for new handsets.
"Creativity appears to be the key to success for large mobile operators during this tough time as changes to business practices from past years have become necessary," said Ryan Reith, senior research analyst with IDC's mobile phone tracker, in the company's statement. "Some of the big operators in mature markets have shifted product portfolios, and some have smartphones accounting for as much as 50 percent of the entire handset offering. We believe this strategy will continue, along with an increase in devices that are media and messaging centric, to help operators maintain revenues."
Strategy Analytics reported similar findings. “The first quarter of 2009 was an exceptionally tough period. Shipment growth contracted for all the top five major vendors, forcing some of them, such as Nokia, to rein in costs and slash thousands of jobs," Neil Mawston, director at Strategy Analytics, said in the company’s statement. "However, one bright spot was found among the smartphone specialists. Apple, for example, more than doubled its volumes year-over-year due to healthy demand for its wildly popular 3G iPhone.”
According to Strategy Analytics, Apple shipped a better-than-expected 3.8 million iPhones worldwide in Q1, up 123 percent from 1.7 million units in Q1 2008. Apple’s 3.8 million iPhone shipments exceeded those of one of its main touchscreen rivals, the Nokia 5800, which recorded slightly lower global volumes of 2.6 million units during the quarter, the research company said.
Both IDC and Strategy Analytics reported that Samsung was the notable top performer among the big five vendors in Q1 and reported that the number two company gained market share while number one company Nokia lost share. Samsung’s Q1 global market share was 18.7 percent, according to Strategy Analytics, and 18.8 percent, according to IDC. Both researchers noted the company's success with touchscreen handsets.
