Outlook Series | Global Mobile Phone Shipments Rise 11.3% in Q4 2009

Global Mobile Phone Shipments Rise 11.3% in Q4 2009

January 29, 2010

The worldwide mobile phone market grew 11.3% in the fourth quarter of 2009 (4Q09), ending five consecutive quarters of retrenchment. According to IDC's Worldwide Mobile Phone Tracker, vendors shipped 325.3 million units in 4Q09 compared to 292.4 million units in the fourth quarter of 2008. Vendors shipped a total of 1.13 billion units on a cumulative worldwide basis in 2009, down 5.2% from the 1.19 billion units shipped in 2008.

"The mobile phone market has rebounded in dramatic fashion," said Kevin Restivo, senior research analyst with IDC's Mobile Phone Tracker. "The Asia/Pacific region and the United States were primarily responsible for pushing the market back into growth territory. Overall, vendors offered a wide array of converged mobile devices (smartphones) and messaging devices in the seasonally strong fourth quarter, to take advantage of increased user demand."

"One area of the market that has consistently shown growth all year is the converged mobile device market," said Ramon Llamas, senior research analyst with IDC's Mobile Devices Technology and Trends team. "Consumer tastes for mobile phones have increasingly shifted from simple voice telephony to greater data usage, and both handset vendors and carriers have been eager to meet demand despite ongoing economic challenges. IDC believes that the converged mobile device market grew nearly 30% year over year, and that the market will continue to gain momentum as device selection increases and price decreases continue into 2010 and beyond."

Market Outlook

IDC anticipates that the worldwide mobile phone market will rebound in 2010. "In 2009, the mobile phone market, like many others, contracted due to economic pressures. But as the year progressed, demand for mobile phones increased each quarter while year-over-year declines progressively decreased," adds Llamas. "Economic recovery mixed with pent-up demand will create positive conditions for handset vendors in both developed and emerging markets in 2010. Meanwhile, key handset vendors expect to exceed their 2009 shipment levels with refreshed portfolios, leveraging interest in touchscreens, messaging devices, and converged mobile devices."

Regional Analysis

In Asia/Pacific (excluding Japan), 2009 as a whole was relatively flat year on year, marked by a stronger preference for low-cost handsets in China and India as users substituted away from more expensive options under recessionary pressure. However, the Asia/Pacific market saw strong gains in 4Q09, reflecting a strong start to recovery. Touchscreen-enabled devices remained a hot segment of the market, helping to drive the demand for converged mobile devices across the region.

The Western European handset market grew on both a year-over-year and sequential basis in 4Q09. LG Electronics and Samsung performed particularly well thanks to their collective strength in the traditional mobile phones segment while Apple, Nokia, and Research In Motion helped sustain growth in the converged mobile device market. On a full-year basis, however, shipments into the region still declined as the improved second-half performance was not enough to offset the declines in the first half. In CEMA (Central and Eastern Europe, Middle East, and Africa), vendors found pockets of improvement during 4Q09, but overall sales in the region were focused on entry-level handsets targeted at first-time users.

The North American market finished 2009 relatively strong posting the second-highest regional growth after the Asia/Pacific region (excluding Japan). Converged mobile devices remained in high demand in the fourth quarter due to a combination of lower priced devices and rate plans as well as greater user and carrier interest. However, feature phones accounted for the majority of shipments last year despite an overall volume decrease on a year-over-year basis. In Canada, mobile phone shipment volumes were buoyed by the introduction of a new wireless network, which increased the demand for smartphones, particularly the Apple iPhone.

The Latin American mobile phone market shrunk in the fourth quarter. However, the performance marked an improvement from the double-digit declines posted in previous quarters. Stronger Brazilian currency pushed prices for mobile phone imports lower, spurring greater demand. In Argentina, channel partners purchased additional product ahead of a new tax rate that came into effect in December. Finally, the popularity of pre-paid service options across the regions included more converged mobile devices, stoking greater demand from vendors.

Top Five Mobile Phone Vendors

Nokia ended the year with a strong fourth quarter performance. Shipments of 126.9 million in 4Q09 represented the company's highest quarterly total in two years (since 4Q07). The higher handset figures were boosted by improved smartphone sales. Nokia introduced a number of new smartphone models, including the X6, to various markets. When its handset shipment performance is measured on an annual basis, however, Nokia shipped fewer devices in 2009 than in each of the last two years.

Samsung bested its single quarter record in 3Q09 by shipping 68.8 million units in 4Q09. The company capitalized on growing interest in converged mobile devices with its Omnia2 while addressing end-user demand for touchscreen and quick-messaging devices within developed markets. In emerging markets, Samsung's attention to local market tastes and extended distribution channels helped build its presence. Despite its heady growth, the company fell further behind market leader Nokia while distancing itself ahead of LG Electronics.

LG Electronics followed last quarter's record-breaking shipment volume with a new record, reaching 33.9 million units in 4Q09. However, operating margins took a sharp drop from 8.4% in 3Q09 to 1.3% in 4Q09, reflecting average selling price declines, higher marketing expenses, and channel expansion within emerging markets. Still, the company continues to reap success from its popular enV and Cookie products while building its converged mobile device portfolio with the Android-powered GW620 and GW880 and Windows Mobile-powered GW820.

Sony Ericsson posted its sixth consecutive quarterly loss this month. However, the joint venture's gross margins rose to 23% from 15% on a year-over-year basis, thanks to sales of new higher-margin mobiles. The vendor's sales of 14.6 million handsets represented its highest shipment figure of the year thanks to the introduction of new models such as the Satio and Aino. It also announced the Xperia X10 and Vivaz models that the company says will be released later this year.

Motorola ended 2009 with mixed results. The company posted its 12th consecutive quarter of year-over-year shipment declines, but also reported its lowest year-over-year decline since the first half of 2008. Moreover, Motorola recorded an operating loss of $132 million, a reduction of nearly 80% from 4Q08 levels. In its first quarter, Motorola demonstrated how Android has become a key component of its product portfolio, shipping 2 million units worldwide. Its DROID and CLIQ/DEXT devices were shipped to more than 20 countries. It also recently announced the BACKFLIP, MOTOROI, MT710, and the XT800 models, which are slated for release later in the year.

Top Five Mobile Phone Vendors, Shipments, and Market Share, Q4 2009 (Units in Millions)

Vendor	4Q09 Shipment Volumes	4Q09 Market Share	4Q08 Shipment Volumes	4Q08 Market Share	4Q09/4Q08 Growth
1. Nokia	126.9	39.0%	113.1	38.7%	12.2%
2. Samsung	68.8	21.1%	52.8	18.1%	30.3%
3. LG	33.9	10.4%	25.7	8.8%	31.9%
4. Sony Ericsson	14.6	4.5%	24.2	8.3%	-39.7%
5. Motorola	12.0	3.7%	19.2	6.6%	-37.5%
Others	69.1	21.2%	57.4	19.6%	20.4%
Total	325.3	100.0%	292.4	100.0%	11.3%

Source: IDC Worldwide Quarterly Mobile Phone Tracker, January 28, 2009

Note: Vendor shipments are branded shipments and exclude OEM sales for all vendors.

Top Five Mobile Phone Vendors, Shipments, and Market Share, 2009 (Units in Millions)

Vendor	2009 Shipment Volumes	2009 Market Share	2008 Shipment Volumes	2008 Market Share	2009/2008 Growth
1. Nokia	431.8	38.3%	468.4	39.4%	-7.8%
2. Samsung	227.2	20.1%	196.6	16.5%	15.6%
3. LG	117.9	10.5%	100.8	8.5%	17.0%
4. Sony Ericsson	57.1	5.1%	96.6	8.1%	-40.9%
5. Motorola	55.2	4.9%	100.1	8.4%	-44.9%
Others	238.6	21.2%	227.6	19.1%	4.8%
Total	1,127.8	100.0%	1,190.1	100.0%	-5.2%

Source: IDC Worldwide Quarterly Mobile Phone Tracker, January 28, 2009

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.