Entner: International handset sales trends, and how the market is shifting

Roger Entner recon analyticsReports about miniscule Android versus iPhone market share difference are captivating the attention of newspaper editors and the public at large, but what do they really tell us? More time is spent on that then the much more interesting travails of RIM, Nokia and Microsoft. While the average consumer might be captivated by miniscule and seasonal movements of the two dominant platforms, as industry practioners we should look towards more meaningful insights than that.

Don't get me wrong: the increase in smartphones is an important and truly transforming phenomenon that changes our daily lives. But from an industry perspective the gigantic shift in profit share over the last few years--where Apple came from nothing in 2006 to more than 50 percent share of mobile device profits today--is one of the trends that is truly impacting and altering the industry and should be captivating our attention much more than one percent up or down. Such small changes are within the margin of error most of the time anyway.

But just like when you are watching a magician's trick, what is at least as important as what catches the eye, is what is hidden from plain sight. One of them is the geographic handset sales trends. The changes that are occurring here are certainly less glitzy but never the less important and impactful.

Table 1: Handset sales by region in millions and as percentage of global sales







North America

345m / 5%

173m / 15%

181m / 15%

178m / 14%

187m / 13%

Latin America

580m / 8%

134m / 12%

139m / 11%

131m / 10%

156m / 11%

Europe & CIS

809m / 12%

301m / 26%

296m / 24%

280m / 22%

296m / 21%

Middle East & Africa

1,611m / 23%

136m / 12%

162m / 13%

155m / 12%

198m / 14%


1,210m / 17%

91m / 8%

110m / 8%

123m / 10%

145m / 10%

Greater China

1,369m / 20%

171m / 15%

195m / 16%

228m / 18%

269m / 19%

Far East

996m / 14%

151m / 13%

158m / 13%

157m / 12%

184m / 13%







World without
India & China

4,341 / 62%

895m / 77%

935m / 75%

901m / 72%

1,022m / 71%

Source: Recon Analytics 2011

The first thing that jumps out is the growing importance of India and China. Their share of handset sales has increased from 23 percent in 2007 to 29 percent in 2010. In raw numbers, the increase in overall handset sales in both countries combined was twice as large as the increase in smartphone sales in the United States. North America's handset sales mix is massively shifting, China and India's handset sales are explosively increasing. But then, having eight times the number of people helps with explosive growth. While in every other region, handset sales shrunk because of the global recession of 2009, China's and India's growth was so large that the overall global handset market still grew. Without these countries the global handset market would have slipped into a one year recession.

Another interesting trend is how the arrival of dual-SIM devices has impacted the handset sales market in India. The increase in wireless subscriptions is significantly larger than devices sales. This leads us to the conclusion that approximately 30 percent of devices sold in India are now dual-SIM. These dual-SIM devices were pioneered by domestic Indian handset manufacturers, which have now captured significant market share. It is only a matter of time, until they start to export their devices and are imitated by other manufactures, which will lead to a relative compression of feature phone sales on a global scale.

The North American market is really bifurcated. Despite the worst recession in 70 years, smartphones are growing explosively and are driving sales figures, while feature phones are quickly becoming an endangered species. The decline in overall handset sales was because feature phone sales declined faster than smartphone sales rose. Whereas the significant increase in 2010 was solely driven by smartphones. In no other region in the world are smartphones as dominant as in North America.

Latin America is following the same trend year over year as the rest of the world, but there are some significant exceptions. Most markets in Latin America actually declined in 2008 compared to 2007, but strong growth in Brazil and Mexico turned around the region. While Brazil continued to be a pillar of strength when it comes to handset sales, the Colombian, Venezuelan and Caribbean markets declined heavily in 2009. The following year, 2010, saw significant growth every country excluding Venezuela, where handset sales fell again.

Despite remarkable political changes we saw in many middle eastern countries that were fueled by mobile phone usage, handset sales in the region and in Africa were rather unremarkable with no particular country specific trends.

The Far East ranging from Japan and Korea in the north to Australia and New Zealand in the south, made up of some of the richest countries in the world to some of the poorest. It is one of the most dynamic and diverse markets. The Australian handset market is one of the few in the world that has grown every year in the last four years. This puts it in the same category as India and China. In 2010, Indonesia was the fastest growing handset market in the world. Handset sales increased by more than 60 percent compared to 2009. Japan's handset market on the other hand, has shrunk by a third from 2007 to 2010.

Europe is the only region in the world where handset sales have not recovered to 2007 levels. This is primarily due to the continuing weakness of handset sales in Germany and Italy. In both countries handset sales remain almost 20 percent below their 2007 levels. Germany remains the third largest handset market in Europe after Russia and the United Kingdom. Italy, on the other hand, which in 2007 was the fourth largest handset market has now fallen to the sixth largest market, more due to the decline in its handset sales rather than an increase in the other markets.

One of the most striking insights is the relative share of each region in regards to population and handset sales. Both India as well as the Middle East and Africa are purchasing significantly less handset than their share of the population. When taking overall handset sales into account one of nine Indians owned a new handset in their hands and only one of eight people in the Middle East and Africa. China and the Far East through their increasing affluence are now purchasing handsets in line with their share of population. This lead to about one in five Chinese to own a new handset, while about one in six in the rest of the Far East was able to do the same. While Latin America represents about 8 percent of the world's population, 11 percent of handsets were purchased in the region. It shows how important wireless devices have become for the inhabitants of the region, where more than a quarter of people purchased a new handset in 2010. Even though Europe's handset sales have barely reached 2007 levels, more than one third of the population purchased a new handset in 2010. By far the most technologically advanced handsets are in the hand of American and Canadian consumers. More than half of the population purchased a new phone last year.

Please join me for a webinar in conjunction with Mobile Future on Thursday, June 23 at 2 p.m. ET where I will provide more in-depth analysis and reveal new insights regarding how American wireless consumers are a key driver of mobile handset innovation by consistently replacing their devices more frequently and quickly than their international counterparts. For more information, visit this link.

Roger Entner is the Founder and Analyst at Recon Analytics. Recon Analytics specializes in fact-based research and the analysis of disparate data sources to provide unprecedented insights into the world of telecommunications.