Mobile Phone Sales Growth Expected To Decline - InformationWeek

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Mobile Phone Sales Growth Expected To Decline

After an increase of 12.4% last year, IDC predicts that annual mobile phone sales will increase by only single digits for the next several years.

The party's over for mobile phone providers that have been enjoying annual double-digit sales growth, according to IDC. In announcing its quarterly handset shipment report Friday, the market research firm reported a big fourth quarter, but predicted the sales surge will slow going forward.

As expected, Nokia led the quarter as it pumped out 1.5 million handsets a day to garner 40% of the worldwide shipments -- more than the combined totals of the next three providers, Samsung, Motorola, and Sony Ericsson.

But the pace of keeping up with shipments growth -- 1.144 billion phones where shipped last year, a 12.4% gain -- can't be maintained. "The expectation that the market would maintain the level of growth it saw over the last three years was unrealistic," said Ryan Reith, IDC senior analyst, in a statement. "We expect growth to be in the single digits throughout 2008, and most likely for years to follow."

The big story in handset shipments has been the loss of momentum by Motorola as Nokia pulled away from the entire mobile phone pack and Samsung, with 13.9% of shipments, passed Motorola, which had 12.2%. Earlier this week, Motorola's new CEO, Greg Brown, issued a grim report on the company's immediate future in handsets as he pledged to work to regain the company's once-dominant momentum.

Another IDC research analyst, Ramon Llamas, pointed to Samsung's strategy of replacing handsets in the United States and Europe as a reason for the company's shipments surge. Samsung took significant market share from Motorola in the midrange and high-end device area, Llamas indicated. "Now that Motorola is implementing a new handset strategy, it will be interesting to watch the hotly contested No. 2 position in 2008," Llamas said.

IDC said Sony Ericsson accounted for 9.2% of shipments in the fourth quarter, while LG had 7.1% market share.

As usual, the fourth quarter was marked by a holiday sales rush. In the past, the holiday sales growth fluctuated between 18% and 30%. However, the 11.6% holiday sales growth figure in 2007 was interpreted by the IDC researchers as the end of an era.

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