Worldwide Mobile Phone Market Experiences Slower Growth as Smartphone Purchases Soften in the Third Quarter, According to IDC

FRAMINGHAM, Mass.--()--The worldwide mobile phone market grew 12.8% year over year in the third quarter of 2011 (3Q11), as smartphone growth declined in key mature markets. According to the International Data Corporation (IDC) Worldwide Mobile Phone Tracker, vendors shipped 393.7 million units in 3Q11 compared to 348.9 million units in the third quarter of 2010. However, the 12.8% growth was higher than IDC's forecast of 9.3% for the quarter and stronger than the 9.8% growth in 2Q11.

It was also the second-lowest growth rate for the overall mobile phone market over the past two years; a reflection of delayed smartphone purchases and conservative consumer spending last quarter. Economically mature regions, such as the United States and Western Europe, were hardest hit as shipment volume to both regions declined on a year-over-year basis.

"The combination of economic uncertainty and anticipation over fourth quarter or late third quarter product releases caused some consumers to delay their smartphone purchases," said Kevin Restivo, senior research analyst with IDC's Worldwide Mobile Phone Tracker. "Many waited for products such as the iPhone 4S, which was announced after the quarter closed, or Research In Motion's BlackBerry 7 phone series, which were released in the final weeks of the quarter."

However, smartphones drive the overall mobile phone market and will continue to do so in the quarters and years to come.

"Smartphone centricity continues to be the hallmark of the mobile phone market," says Ramon Llamas, senior research analyst with IDC's Mobile Phone Technology and Trends team. "Two years ago, smartphones comprised just a small portion of overall shipments among the leading vendors. Today, that proportion has grown considerably, thanks in large part to LG, Motorola, Samsung, and Sony Ericsson making Android smartphones a priority. At the same time, the growing presence of companies focused exclusively on the smartphone market - Apple, HTC, and RIM - also demonstrate the impact that smartphones have had on the mobile phone market as a whole."

Regional Analysis

  • In Asia/Pacific (excluding Japan) (APeJ), feature phones recovered in the third quarter on the back of Nokia's resolved inventory channel issues in China combined with the strong showing of its dual-SIM handsets across emerging markets like India and Southeast Asia. With Nokia fighting back at the Chinese low-end competitors, the proliferation of these smaller brands has slowed as margins hit razor-thin levels. APeJ smartphone growth last quarter was driven primarily by Samsung and HTC, as well as ZTE in China. In Japan, the market rebounded sharply after two quarters of either low single-digit growth or outright market decline following the natural disasters of this spring.
  • The Western European phone market declined as a result of lower demand for both feature phones and smartphones. The smartphone device type growth was mainly driven by mid-tier Android devices. High-end smartphone growth was negatively impacted by Apple's fourth-quarter iPhone 4S launch, which caused consumers to delay purchases. Meanwhile, Nokia's transition from the Symbian to the Windows Phone operating system as its primary smartphone platform led to a transition. Feature phones declined as consumers that replaced their devices upgraded to smartphones while others held on to their devices for longer periods of time. Overall the Central Europe, Middle East and Africa (CEMA) markets showed strong growth due in large part to Nokia's rebound in the regions. Bucking its global troubles, Nokia had a very strong 3Q11 due to feature phone growth. Its smartphone decline continued, however, but it remained the market leader in the region. Among the niche smartphone brands, HTC did particularly well in some markets, including Russia. RIM continues to make progress in the Middle East and Africa, but fared less well in Central and Eastern Europe.
  • In North America, new iPhone demand went unfulfilled during 3Q11, leaving the door open for other companies to launch their competing devices. Research In Motion, which had not introduced a new BlackBerry smartphone during the entire first half of 2011, debuted several new models running on the new BB OS7 platform. Similarly, LG, Motorola, and Samsung unveiled their own respective Android flagship models, keeping the Android platform front and center in the smartphone market.
  • The Latin America market growth was driven by smartphones though some users delayed purchases in anticipation of new hero device launches in the region. However, more touchscreen smartphones hit the market as vendors seek to broaden the appeal of smartphones to users. Meanwhile, Greater China vendors released new high-end devices in an attempt to grow market share in the region.

Top Five Mobile Phone Vendors

Nokia reversed a global market share on a sequential basis last quarter thanks to stronger feature phone sales in key regions as well as the clearing of inventory backlogs in traditional strongholds, namely China and Europe, which led to a sharp year-over-year shipment and share decline last quarter. Nokia's smartphone fortunes could improve in quarters to come now that it has introduced the Nokia Lumia devices, powered by Windows Phone 7, to markets where its brand is still relatively strong and in areas where the company has lost share over the past two years.

Samsung registered double-digit growth compared to the third quarter a year ago and also outpaced the market. The company's growth was again driven by smartphone sales, such as the Galaxy S2. Smartphone sales were notably higher in emerging markets including China. Samsung outpaced the feature phone market as well in terms of growth. The vendor didn't close the market share gap on Nokia for the top mobile phone position, but it remains within striking distance.

LG Electronics maintained its position as the number 3 mobile vendor worldwide for the twelfth quarter in a row, but continued soft demand for both its feature phones and smartphones led to volume levels not seen since 2Q 2007. With only a few new devices launched and an aging feature phone portfolio, LG's warnings of lower year-over-year shipment volume appears to have come to fruition. By the end of the year, LG's grasp on the number 3 position may be loosened as Apple's aggressive smartphone campaign takes hold in 4Q 2011.

ZTE jumped into the number 4 position thanks to momentum carried into 3Q 2011 with key devices shipping into strategic regions. In China, ZTE has nearly doubled its smartphone volumes from the previous quarter, while within North America, ZTE's entry-level voice-centric phones at AT&T have gained greater depth. At the same time, ZTE's target of 12 million smartphone shipments worldwide in 2011 became more of a reality with the introduction of two new Android-powered smartphones for the North American market.

Apple gained share and posted the third-highest growth rate of any Top 5 vendor but dropped to the number 5 position globally. Global iPhone shipments declined sequentially during the same quarter that company founder Steve Jobs handed the CEO reins to Tim Cook. The decline, not coincidentally, happened as Apple readied itself for the 4S launch, which many waited for. Apple's ability to upgrade 3GS users to the 4S, for example, and make continued inroads into developing economies, where it has been less successful, will help dictate the company's smartphone fortunes in the future.

Top Five Mobile Phone Vendors, Shipments, and Market Share, Q3 2011 (Units in Millions)
Vendor      

3Q11 Unit

     

3Q11 Market

     

3Q10 Unit

     

3Q10 Market

     

Year-over-year

Shipments

Share

Shipments

Share

Change

Nokia 106.6 27.1% 110.4 31.6% -3.4%
Samsung 87.8 22.3% 71.4 20.5% 23.0%
LG Electronics 21.1 5.4% 28.4 8.1% -25.7%
ZTE 19.1 4.9% 12.1 3.5% 57.9%
Apple 17.1 4.3% 14.1 4.0% 21.3%
Others 142 36.1% 112.5 32.2% 26.2%
Total 393.7 100.0% 348.9 100.0% 12.8%
 

Source: IDC Worldwide Mobile Phone Tracker, October 27, 2011

 
Note: Vendor shipments are branded shipments and exclude OEM sales for all vendors.
 

For more information about IDC's Worldwide Quarterly Mobile Phone Tracker, please contact Kathy Nagamine at 650-350-6423 or knagamine@idc.com.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community to make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 47 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

All product and company names may be trademarks or registered trademarks of their respective holders.

Contacts

IDC
Kevin Restivo, 416-673-2230
krestivo@idc.com
or
Ramon T. Llamas, 508-935-4736
rllamas@idc.com
or
Michael Shirer, 508-935-4200
press@idc.com

Release Summary

The worldwide mobile phone market grew 12.8% year over year in the third quarter of 2011, according to the International Data Corporation (IDC) Worldwide Mobile Phone Tracker.

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Contacts

IDC
Kevin Restivo, 416-673-2230
krestivo@idc.com
or
Ramon T. Llamas, 508-935-4736
rllamas@idc.com
or
Michael Shirer, 508-935-4200
press@idc.com