Mobile handset market stays on track in Q1

The global mobile-handset market in the first quarter of 2008 appeared to be unaffected by the economic slowdown, with shipments rising by a double-digit%age compared to the same period in 2007, according to iSuppli Corp.

Global mobile-handset shipments reached 296 million units in the first quarter of 2008, up 17% from 253 million in the first quarter of 2007. While shipments were down 12.4% compared to 338 million in the fourth quarter of 2007, this decline represents normal seasonal fluctuations for the mobile handset business, which typically undergoes a deceleration following the peak selling period in the fourth quarter. In the first quarter of 2007, for example, shipments decreased by 12.8% on a sequential basis.

Looking at the leading worldwide suppliers of mobile handsets, the players occupying the Top 5 ranks remained the same "” but there was some change in the order compared to the fourth quarter of 2007.

The table below presents iSuppli's global Top-5 mobile handset shipment ranking for the first quarter of 2008.
 
Nokia faces North American struggles in Q1

Leading handset brand Nokia in the first quarter easily maintained its market dominance, with shipments of 115.5 million units, which gave it a market share of 39%. Shipments were up 26.8% compared to the first quarter of 2007.

However, the Finnish company's shipments declined by 13.5% compared to the fourth quarter of 2007, which was slightly worse than the market average. This caused Nokia's market share to decline by half a%age point from 39.5% in the fourth quarter.

Nokia managed to defy the seasonal slowdown in the key strategic territory of China, with its shipments to the nation rising 4% sequentially to reach 21 million units. China in the first quarter of 2008 grew to account for 18.2% of Nokia's worldwide shipments, up from 14.5% during the same quarter in 2007.

The company also made gains in the Latin American Market, with 63% year-on-year growth to 11.9 million units. Despite its progress in China, Nokia is still struggling in the North American market. Nokia's shipments to the region in the first quarter declined to 2.6 million units, a historical low, and a 49% decrease from the fourth quarter of 2007.
 
Motorola remains in free fall

Amid precipitous losses, declining market share and mounting indications of restructuring, US-based Motorola's mobile handset business continued to struggle in the first quarter. The third largest handset supplier retained its position with an 9.3% share of shipments, down from 12.1% in the fourth quarter.

Although Motorola has tried to maintain a lean operation by instituting workforce cuts across all business units, the company's Mobile Devices group still suffered a disappointing negative 10.5% operating profit margin in the first quarter. Motorola had narrowed its market-share gap with No 2 Samsung Electronics Co. Ltd. in the fourth quarter. However, Motorola's underperformance in the first quarter cemented the company's rank at No. 3, only slightly ahead of No 4 ranked, LG Electronics, by 1% point of market share.
 
Samsung stays solid

 

Samsung reinforced its No. 2 position in the first quarter of 2008 at the expense of Motorola. Company handset market share rose to 15.6% in the first quarter, up from 13.7% in the fourth.

The South Korean electronics giant in the first quarter expanded its presence in emerging markets, namely China and India. In developed regions, Samsung also gained traction with its flagship products and the company continued to benefit from refreshing its product portfolio to address all market segments.

Samsung in the second quarter of 2007 passed Motorola to become the No. 2 handset brand and the company widened its market share lead by 6.4%age points in the first quarter.

Aside from its market-share gain, Samsung also cut down on unnecessary marketing expenses to improve profitability.
 
Sony Ericsson slips

Sony Ericsson in the first quarter slipped to the fifth spot, down from No. 4 in the fourth quarter. Company shipments fell by 27.6% sequentially and rose by a scant 2.3% compared to same period in 2007 "” massively underperforming the market by either measure. Sony Ericsson's global market share declined to 7.5%, down from 9.1% in the fourth quarter.

The company blamed its weak performance on slow demand for mid-range to high-range handsets, areas which have traditionally been strong for the company.

Sony Ericsson suffered its largest quarterly sequential revenue decline in its home market of Western Europe, with a drop of 38%. The company's handset Average Selling Price (ASP) showed a slight sequential decline of 1.6% from the first quarter of 2008 in Euros.

However, the company's ASP declined by 9.7% compared to the same period in 2007, which can be explained by its moves to expand its product portfolio to lower cost handsets that address emerging markets.
 
LG surges

LG Electronics of South Korea managed to outperform the industry in the first quarter, with shipments rising by an industry leading 3% compared to the fourth quarter and by 54.4% compared to a year earlier.

The company not only improved its market share to 8.2% on unit shipments of 24.4 million, but it also boosted its operating profit to 13.9%, up from 8.8% last quarter.

The company credited its sales growth to strong results in emerging regions and in its domestic market. LG achieved quarterly sequential growth of 32.4% in emerging markets with 6.6 million units. However, European regional sales decelerated with a sequential decline of 29%.

Despite this, the company scored an 8.2% market share in the first quarter of 2008, allowing it to pass Sony Ericsson to be the No. 4 player in the market.
 
China players emerging

While the top handset brands are in neck-and-neck race, the industry is keeping an eye on emerging players in the market"”particularly China's Huawei and ZTE.

 

ZTE ended the first quarter of 2008 with shipments of 6 million units, up 51.5% from the same quarter last year. These two OEMs' products can now be found on US operators' networks, opening up the possibility that the companies could expand their presence in the US in the coming years.

iSuppli Table: Top-5 Mobile-Handset Brands in Q1 2008 (Ranking By Unit Shipments in Thousands)

Q1 '08 RankQ1 '07 RankCompanyQ1 '07 ShipmentsQ4 '07 ShipmentsQ1 '08 Shipments Q1 '08 Market ShareSequential ChangeYr Over Yr ChangeQ4 '07 Market Share
11Nokia91,100 133,500 115,50039.0%-13.5%26.8%39.5%
22Samsung34,80046,300 46,300 15.6%0.0%33.0%13.7%
33Motorola45,40040,900 27,400 9.3%-33.0%-39.6%12.1%
45LG Electronics15,80023,700 24,400 8.2%3.0%54.4%7.0%
54Sony Ericsson21,80030,800 22,300 7.5%-27.6%2.3%9.1%
Others36,40062,800 60,10020.3%-4.3%65.1%18.6%
Total245,300 338,000 296,000100.0%-12.4%20.7%100.0%

Tina Teng, Analyst, iSuppli Corp

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