Analyzing the world's 10 biggest handset makers in Q1

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Michael morgan ABIThe numbers are in, and it's time to make sense of the data. ABI's Michael Morgan checks out the world's 10 largest branded cell phone makers in the first quarter of 2011, providing sales data as well as insight into their strategy and competitive position in the market.

Though most research firms only list the market's top five handset makers, ABI lists the full top 10 (and the firm is providing shipment numbers for all of the vendors listed).

A few notes: ABI's numbers represent "sell in," or phone shipments into the retail channel, rather than "sell out," or sales to consumers. Further, ABI's ranking only counts phones that carry the manufacturer's brand. Therefore, phones that bandy a carrier's logo without a hint of which company actually built the device are not counted.

And see ABI's first quarter 2009 rankings, second quarter 2009 rankings , third quarter 2009 rankings, fourth quarter 2009 rankings, second quarter 2010 rankings, third quarter 2010 rankings and fourth quarter 1010 rankings.

(And click here for a wrapup of wireless carriers in the first quarter and here for a look at the first quarter earnings season.)

First quarter 2011 market share by OEM

OEM shipments from first quarter 2010 to first quarter 2011

Analysis from ABI's Michael Morgan

Nokia Nokia handset shipments sequentially decreased 12 percent Q1 while the overall market decreased 13.9 percent sequentially. As a result, Nokia's market inched up to 32.7 percent in the first quarter. The world's largest handset OEM has been losing market share in emerging markets where the low-cost handsets that make up 77 percent of its shipments are facing competition from white label OEMs and top ten companies such as Huawei,  ZTE and TCL. ABI Research believes that the trend of market share loss will continue to accelerate as the handset giant absorbs yet another "re-org." Nokia has tied its future smartphone fate to Microsoft's Windows Phone 7 operating system and ecosystem which has led to 7,000 job cuts. On the feature phone side, ABI Research believes that Chinese manufacturers will in turn continue to eat into Nokia's low end market share.
Samsung As companies get larger, it becomes increasingly difficult to deliver organic growth that meets or exceeds the industry average. Samsung has managed to exceed the industry average growth by delivering competitively priced handsets with the design features of more expensive handsets. In the smartphone realm, Samsung has shown great success with its Android-based Galaxy series and its homegrown bada OS. Q1 numbers showed expected seasonal declines, however the brunt of these declines were exhibited in the feature phone segment. As, feature phones make up the vast majority of Samsung's shipments, the 16 percent sequential gain in smartphone shipments were not sufficient to deliver sequential growth in Q1.
LG LG's shipments declined 20 percent in Q1 and underperformed against the overall market. LG has been struggling to move from the feature phone world to a profitable smartphone venture on the back of Android and  a foray into 3D smartphones. Despite the large sequential decline in shipments, the monetary losses were an improvement over Q1 2010 as LG focuses on improving operation efficiency and shifting to more profitable smartphones. Considering the continued declines in the feature phone market, it will be important that LG makes the transition to smartphones quickly, or it will begin to lose its top five ranking much like Sony Ericsson, which is no longer in the top ten this quarter due to a massive decline feature phone shipments.
Apple iPhone Apple continues to be the one handset OEM that can do no wrong. In Q1, Apple defied all seasonality and supply chain concerns to deliver a sequential growth of 15 percent or 2.8 million additional iPhones. The vast majority of this growth can be found in the additional 2.2 million iPhones that were sold through Verizon Wireless with the remainder being driven by strong growth  in the APAC region. ABI Research expects Apple to exhibit continued growth through 2011 on the back of Verizon and other new CDMA markets.
RIM Research In Motion has faced increasing public scrutiny regarding its ability to compete, an aging line of smartphones, and its recent release of the Playbook media tablet. Regardless of said scrutiny, RIM was still able to deliver respectable sequential shipment growth. While RIM has publicly stated that sales are likely to decrease in Q2, ABI Research believes it is important to note that in Q3 RIM will begin to deliver a refreshed line up of handsets featuring much more powerful 1.2 GHz processors. This will be a critical point for RIM, whereby it must show the market that it can still deliver the type of smartphone experience that both consumers and enterprises desire.
ZTE ZTE has made a name for itself with low-cost handsets in emerging/developing markets such as India, China, LATAM and Africa. ZTE's focus on emerging markets has served it well as Nokia continues to  bleed share in these segments which  are predicted to deliver the greatest number of new wireless customers in the coming years. As China rises, ZTE is positioned to benefit from Nokia's failings and the growth of China's homegrown 3G networks. On the smartphone of the market, ZTE has set a goal to ship 12 million smartphones in 2011 (up from 3 million in 2010). Given the expected growth of $150 smartphones in 2011, ABI Research believes ZTE is well positioned to capture its fair share of this market segment in emerging markets such as China and Africa.
HTC HTC remained on the very short list of handset OEMs to deliver sequential quarterly growth in Q1. HTC's focus on cutting edge technology and design allows its handset models to remain competitive much longer throughout the device life cycle. As such, HTC growth remained strong on the back of a broad portfolio of both mid tier and high end smartphones. ABI Research believes that HTC will continue to demonstrate excellent performance in 2011 as it releases its cadre of 4G (LTE and WiMAX) devices in the US Market.
Huawei Historically considered a low cost Chinese handset OEM and direct competitor to ZTE, Huawei has continued to show strong YoY growth in its handset shipments. Huawei has also begun to show marked international improvement by shipping 3 million Android smartphones in Q1, with approximately 30 percent of these smartphones making their way to the North American market. ABI Research believes that these smartphones offer the potential for Huawei to generate improved international brand recognition and move rapidly up the top ten list over the coming years.
Motorola In its first quarter as a separate entity called Motorola Mobility, Motorola handset shipments have experienced a sequential decline from soft North American performance and declines in feature phone shipments. Delays in the launch of LTE based products may keep Motorola from Q2 growth, however ABI Research believes any lost ground will be regained in the second half of 2011.
TCL /Alcatel Mobile Phones TCL is a well-known electronics brand in China that had formed a joint venture with Alcatel of France to leverage new markets and carrier relationships. For TCL, the strong growth was led by a 105 percent jump in overseas sales of entry- to mid-level devices in EMEA. The Alcatel/TCL device portfolio is a mix of low- end candy bar devices and colorful clamshell devices with basic media capabilities.  Most TCL handsets are designed to meet the universal needs of all regions served by Alcatel and TCL, allowing for greater production volume per device model. ABI Research believes TCL has taken advantage of the growing 3G market potential of China and abroad to deliver continued growth.

The raw data

Market share in 2011 Q1
Nokia 32.7%
Samsung 21.3%
LG 8.1%
Apple 4.3%
RIM 3.8%
TCL /Alcatel 3.3%
Motorola 3.0%
Huawei 3.0%
ZTE 2.6%
HTC 2.4%
Other 15.6%

Shipments (in millions)
Vendor 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011
Nokia 107.8 111.1 110.4 123.7 108.5
Samsung 64.3 63.8 71.4 80.7 70.0
LG 27.1 30.6 28.4 30.6 24.5
Apple 8.8 8.4 14.1 16.2 18.7
RIM 10.5 11.2 12.1 14.2 14.9
TCL (Alcatel) 2.9 7.6 9.0 12.5 8.7
Motorola 8.5 8.3 9.1 11.3 9.0
Huawei 6.1 6.7 6.9 7.7 9.4
ZTE 8.0 9.9 8.6 9.6 12.1
HTC 3.3 5.4 6.8 9.1 9.7
Sony Ericsson 10.5 11.0 10.4 11.2 8.1

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