Mobile market growth slows

01 November 2010

HELSINKI: Growth in the cellphone market showed signs of a mini slump in September despite an impressive boom in smartphone sales, a report from Strategy Analytics (SA) has shown.

While the phones market overall - the largest volume electronics industry - has surged this year from a slump in 2009, when the recession hit consumer spending around the world, continued worries over economic growth and component shortages could see the pessimism continuing.

SA believes that the overall annual market growth in cellphones slowed to 13 percent in the third quarter of this year, down from 16% in the first half, and it forecasts that growth will slow further to around 10% in Q4.

"Component shortages and ongoing economic volatility slightly constrained volumes," analyst Neil Mawston said.

"We expect the escalating smartphone wars to provide positive upside for handset volumes in the fourth quarter, but the volatile supply of certain components will mean some vendors may not be able to deliver their fully desired output of phones."

Several handset makers, including Nokia and Sony Ericsson, have said that component shortages dragged their third quarter sales to below market expectations.

"The hangover from the economic downturn persisted with constrained component supply impacting performance," said CCS Insight analyst Geoff Blaber.

"We expect supply to remain a problem in the fourth quarter as an abundance of smartphones and a swathe of tablet devices increases pressure on component supply," he added.

The smartphone market continued to surge in the third quarter, with sales of the Apple iPhone rising by 91% and making it the number four global handset vendor when measured by volume.

Since 2009, the iPhone has generated the industry's biggest profits.

"The entrance of Apple to the top 5 vendor ranking underscores the increased importance of smartphones to the overall market," IDC analyst Kevin Restivo said in a statement, adding that the firm expected smartphone market volumes to grow by 55% this year.

Sony Ericsson and Motorola both benefited from their shift in focus to smartphones during the third quarter, but their total sales volumes continued to shrink sharply from a year ago as they sold fewer of their inexpensive models overall.

Among the top three vendors, only the number two player, Samsung Electronics, continued to win market share, while the share of LG Electronics and that of market leader Nokia shrank in Q3.

Data sourced from Reuters; additional content by Warc staff