After 23 Years, Mobile Phone Sales Breach Billion Mark - InformationWeek

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After 23 Years, Mobile Phone Sales Breach Billion Mark

It has taken 23 years, but global mobile handset shipments reached 1 billion units during 2006, according to two market research groups, Strategy Analytics and IDC.

LONDON — It has taken 23 years, but global mobile handset shipments reached 1 billion units during 2006, according to two market research groups, Strategy Analytics and IDC.

Strategy Analytics (Milton Keynes, England) said Thursday (Jan. 25) a record 300 million mobile phones were shipped in the fourth quarter, a healthy 22 percent up on a year earlier. Nokia passed 100 million units for the first time in this quarter, and maintained its lead with a 35.2 percent share for the final quarter, and 34.1 percent for 2006 sales overall.

According to Neil Mawston, associate director of the Global Wireless Practice at Strategy Analytics, the industry is expected to ship 1.1 billion units in 2007, a year on year growth of 12 percent. It put growth during 2006 at 24.7 percent.

Mawston said emerging markets, mostly Asia Pacific and Africa, will continue to be the main engines of global volume, but not profit, growth. Developed markets, such as Western Europe, would remain relatively sluggish.

Highlights for the quarter were Motorola gaining 4 points of market share, but saw tumbling Average Selling Prices and profits (see Motorola cuts 3,500 jobs, posts results story earlier this week.

Strategy Analytics also says Samsung's share was marginally down, as was LG. "The star performer overall was Sony Ericsson. A combination of attractive models and cool sub-brands drove shipments to an all-time high. In terms of revenues, Sony Ericsson has become the world's third largest vendor, overtaking Samsung for the first time", said Mawston.

He estimates Sony Ericsson had sales of $4.9 billion with Samsung put at $4.6 billion for the year.

By market share for the quarter, Motorola rose to 21.9 percent from 20.8 percent in the previous three months, Samsung fell to 10.7 percent from 11.9 percent, Sony Ericsson rose to 8.7 percent from 7.7 percent and LG fell to 5.7 percent from 6.4 percent.

However, the market research group cautioned that even though Nokia performed greatly in 2006, shipping 348 million units during the year, its operating margin remained flat, at just 15 percent, with an ongoing shift in product-mix toward the low-end limiting profit upside.

Similarly at Motorola, while shipments grew by 47 percent during the fourth quarter, and sales in emerging markets continued to gather pace, "this volume has been gained at the expense of value. Motorola has been slashing prices to raise unit share, causing its operating margin to plunge to just 4 percent during the quarter," said Mawston.

Samsung's annual growth rate is put at 18 percent, lagging all its big competitors, and was completely overshadowed by Sony Ericsson's best performance of 61 percent growth. The Korean supplier is said to be losing out to Nokia in smartphones, while Motorola and Sony Ericsson have gained serious momentum in feature phones.

Strong demand for the Walkman and CyberShot ranges is driving Sony Ericsson's expansion, said Mawston.

Figures from IDC (Framingham, Mass.) closely mirror the findings from Strategy Analytics. IDC picked out GPS enabled phones as the market segment to watch this year, and suggested that mobile TV will finally make an entrance in selected markets.

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