Smartphones still shine amid declines in handset sales

Wed, 05/20/2009 - 8:10am
Maisie Ramsay, Wireless Week

Smartphone sales once again provided a glimmer of hope in an otherwise grim report (available here) of handset sales conducted by the U.K.-based arm of research firm Gartner.

Sales of smartphones worldwide grew almost 13 percent, to 36 million units, despite the largest sequential contraction in overall handset sales since the firm began tracking them in 2001. Worldwide handset sales plummeted 14.5 percent from last quarter, bottoming out at 269 million units. The company reiterated its view that sales to consumers will decrease by about 4 percent in 2009 compared with 2008.

The research firm attributed touchscreen technology to the popularity of smartphones.

“Much of the smartphone growth during the first quarter of 2009 was driven by touchscreen products, both in mid-tier and high-end devices,” said Roberta Cozza, principal analyst at Gartner. “‘Touch for the sake of touch’ was enough of a driver in the mid-tier space, but tighter integration with applications and services around music, mobile e-mail and Internet browsing made the difference at the high end of the market.”

Together with the conclusions of a recent report from Forrester research (story here), it appears that smartphones are not only resilient to otherwise slumping demand but are reaching ubiquity. Forrester suggests that the hardware features attributed to smartphones are becoming so commonplace that the market will soon transition to a world “where we just have intelligent phones, not ‘voice phones,’ ‘smartphones’ and ‘feature phones.’”

However, the attractiveness of smartphones is not enough to turn around the entire handset market. Although markets in North America and China showed some signs of recovery, Gartner does not expect demand to stabilize until the second half of 2010. The global handset market is expected to grow between 5 percent and 6 percent in 2010, again buoyed by smartphones.

The slump in sales hit manufacturers differently. LG Electronics grew its market share by 1.9 percentage points on a “very strong portfolio of touchscreen, messaging and imaging devices.”

Samsung Electronics not only returned to profitability, but increased its market share to 19.1 percent. Gartner expects Samsung to get a boost from the announcement of its first Android-based product, the i7500, which will help get the company through the “highly competitive second half of 2009."

However, Nokia, Motorola and Sony Ericsson all lost market share.

Nokia’s market share hit 41.2 percent, down from 45.1 percent last year. Despite falling sales and an 18 percent decline in its handsets’ average selling price, the company still managed to maintain its position as market leader.

Research In Motion came in after Nokia in terms of market share, boasting a 19.9 percent market share on sales of 7.23 million units.

Motorola’s market share deteriorated to 6.2 percent as the U.S.-based company "continued to experience significant difficulties, even in its home market."

Sony Ericsson saw its market share fall to 5.4 percent, which Gartner attributed to a weak product portfolio.

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•  Sprint: The price is right
•  Moody's puts DirecTV ratings on review for upgrade
•  Cisco wraps up purchase of Tidal
•  AT&T to expand netbook distribution
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•  Smartphones still shine amid declines in handset sales
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