Nokia, Motorola, and Sony Ericsson all lost global market share in Q2 while rivals Samsung and LG both managed to notch up some extra percentage points.
Gartner’s latest analyst report showed worldwide mobile phone sales totalled 286.1 million units in Q2, a 6.1 per cent decrease from Q2 2008. However, smartphone sales surpassed 40 million units, a 27 per cent increase from the same period last year, representing the fastest-growing segment of the mobile-devices market.
Nokia’s 1.054 billion handsets sold in Q2 were down from the 1.204 billion sold in the same quarter last year, seeing its market share drop 39.5 per cent to 36.8 per cent.
Nokia maintained its leadership position, but its portfolio remained heavily skewed toward low-end devices, according to Gartner analysts. Its flagship high-end N97 smartphone met little enthusiasm at its launch in the second quarter of 2009 and has sold just 500,000 units in the channel since it started to ship in June, compared to Apple’s iPhone 3G S, which sold one million units in its first weekend.
Gartner research director Carolina Milanesi said: “The right high-end product and an increased focus on services and content are vital for Nokia if it wants to both revamp its brand and please investors with a more promising outlook in average selling prices and margins.”
Meanwhile, Samsung sales increased from 46.38 million in Q2 2008 to 55.43 million this year, increasing market share from 15.2 per cent to 19.3 per cent.
LG moved up two percentage points to take 10.7 per cent market share this quarter, thanks to handset sales rising from 26.7 million in Q2 2008 to 30.5 million this quarter.
Gartner said Samsung’s touchscreen devices, QWERTY phones and smartphones drove sales in mature markets, and analysts expects it to continue to gain market share in the second half of 2009 to close the gap with Nokia.
Gartner also expects LG to keep moving into lower-tier devices to drive growth in emerging markets and be well-positioned to take advantage of China’s 3G rollout.
Motorola’s sales slid to almost half their figure in Q2 2008, to just under 16 million this quarter. Gartner said this was slightly better than expected, but its presence had rapidly concentrated on the Americas, and had therefore lost most of its share of the Western European market, where it sold fewer than one million units in Q2.
Sony Ericsson’s market share dropped nearly three percentage points to 4.7 per cent, with sales also falling from nearly 23 million in Q2 2008 to 13.6 million this quarter. Gartner attributed Sony Ericsson’s poor performance to its uncompetitive range of handsets. Said Milanesi: “Sony Ericsson has neglected to exploit key trends such as QWERTY products for messaging and e-mail, internet browsing and navigation. If it wants to build the presence of its three new products announced this quarter in the channel and capture Christmas sales, the products need to come to market early in the fourth quarter of 2009.”
She summed up: “Despite the challenging market, some devices sold well as consumers who would usually have purchased standard midrange devices either cut back to less expensive handsets or moved up the range to get more features for their money.
“Touchscreen and QWERTY devices remained a major driver for replacement sales and benefited manufacturers with strong, touch-focused midtier devices. However, the decline in average selling price accelerated in the first half of the year and particularly affected manufacturers that focus on mid-tier and low-end devices, where margins are already slim.”
Milanesi said the recession continued to suppress replacement sales in both mature and emerging markets. The distribution channel dealt with lower demand and financial pressure by using up 13.9 million units of existing stock before ordering more. Gartner expects the gap between sell-in to the channel and sell-through to customers will reduce in the second half of 2009 as the channel starts to restock.
Smartphone sales were strong during the second quarter of 2009, with sales of 40.9 million units in line with Gartner’s forecast of 27 per cent year-on-year sales growth for 2009. “Given the higher margins, smartphones offer the biggest opportunity for manufacturers. It is the fastest-growing market segment and the most resistant to declining average selling prices,” said Milanesi.
Apple’s expansion into a larger number of countries in the past year produced a clear effect on sales volumes, as have the recent price adjustments on the 8GB 3G iPhone. Sales of 5.4 million units in Q2 indicated a 51 per cent growth in shipments and helped Apple maintain the number three position in the smartphone market, where it has stayed since the third quarter of 2008. Gartner said the full potential of the new iPhone 3G S will only start to show in the sales figures in the second half of 2009.
At the high end of the smartphone market, HTC remained in the number four position behind Apple, where it has been since the third quarter of 2008. It reported lower expectations for the second half of 2009 due to product delays and now expects 2009 revenue to decline by low- to mid-single digits year-on-year, far below its previous outlook of 10 per cent annual growth.
In the smartphone operating system (OS) market, Symbian held 51 per cent share, down from 57 per cent a year ago, while RIM and Apple grew their shares year-on-year. Android’s share was just under two per cent of the market and more Android-based devices will come to market in Q4, intensifying competition in the smartphone OS market, particularly for Symbian and Windows Mobile. Microsoft’s share continued to drop year-on-year to account for nine per cent of the market in Q2.
For the remainder of 2009, Milanesi said, manufacturers must offer products in line with consumer and operator demand, such as touchscreens, focus on user interfaces and application and content ecosystems. She said mobile operators are likely to drive competition among manufacturers as they start selling e-book readers and mini-notebooks from other manufacturers to foster mobile broadband subscriptions.
Operators are also starting to subsidise e-book readers and mini notebooks on contract and this means that there will be less subsidy available to drive sales of mobile phones and smartphones. “In turn, operators will demand lower prices from phone manufacturers, which will be under even more pressure to deliver strong feature sets at the lowest possible price,” she concluded.