Mobile Phone Shipments To Drop 9%

Experts predict that shipments won't return to last year's flourishing levels until 2012.
The mobile phone market is expected to face a 9% drop in shipments because of the economic climate that's sapping demand, according to a new report by Ovum.

The report is in line with recent predictions by Samsung and Nokia, and the decline would be only the second one the industry has seen since its inception in the 1980s. The fourth quarter was already brutal for companies like Sony Ericsson and Motorola, and first-quarter shipments dipped almost 16% compared with the year before.

The Ovum study found the most drastic drop in demand in the midtier or feature phone category. Sony Ericsson has been hit hard by this trend, as its portfolio includes a lot of feature phones that are capable of playing music or have photo-centric features.

"This has had a polarizing effect on the handset market with vendors and mobile operators focusing on two types of handset: those targeting the low-end and high-end segments," said Adam Leach, principal analyst at Ovum, in a statement. "This in turn has quickened the replacement of 2G in favor of 3G handsets, with high-end 2G handset shipments suffering the most from the shift."

Despite the decline in the overall market, smartphones are still expected to grow. The market will increase thanks to the spread of mobile Internet services, as well as highly anticipated handsets like the Palm Pre, Apple's follow-up to the iPhone, and the sequel to the touch-screen BlackBerry Storm.

Ovum said the shipments should begin to recover in the second half of 2009, but it will take until 2012 before shipment volumes get back to the levels they were in 2008.

Most companies are just starting the hard work of mobilizing workforces by bringing the software they use to smartphones. InformationWeek analyzed this issue in an independent report, and it can be downloaded here (registration required).

Editor's Choice
Brian T. Horowitz, Contributing Reporter
Samuel Greengard, Contributing Reporter
Nathan Eddy, Freelance Writer
Brandon Taylor, Digital Editorial Program Manager
Jessica Davis, Senior Editor
Cynthia Harvey, Freelance Journalist, InformationWeek
Sara Peters, Editor-in-Chief, InformationWeek / Network Computing