1.15 Billion Mobile Phones Sold In 2007. 2008? Not So Much - InformationWeek

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1/25/2008
11:27 AM
Eric Ogren
Eric Ogren
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1.15 Billion Mobile Phones Sold In 2007. 2008? Not So Much

After record sales for the last few years, the growth rate of new people lining up to purchase cell phones is beginning to wane. 2007 saw a 12.4% increase in the number of handsets sold. The numbers this year and beyond likely won't be so rosy, says IDC.

After record sales for the last few years, the growth rate of new people lining up to purchase cell phones is beginning to wane. 2007 saw a 12.4% increase in the number of handsets sold. The numbers this year and beyond likely won't be so rosy, says IDC.About 334 million phones were sold in the fourth quarter of 2007, which broke records and beat third quarter numbers by a healthy 15.3%. But the party is starting to wind down. It's not that there won't be over one billion phones sold in 2008, but the growth rate is going to edge backward a bit.

Ryan Reith, senior research analyst with IDC's Worldwide Mobile Phone Tracker, said, "Over the last three years, growth in the industry during the holiday quarter has fluctuated from 18% to 30%, and this past quarter we saw it drop to 11.6%. The expectation that the market would maintain the level of growth it saw over the last three years was unrealistic. We expect growth to be in the single digits throughout 2008, and most likely for years to follow."

One thing to consider is this. Half the people on the planet now have cell phones. Sure, that leaves some 3 billion people to go, but many of the mature markets are near or at 100% penetration. Only emerging markets will provide continued growth for handset sales. Many of those emerging markets are going to take a longer time to mature.

IDC goes on to point out the success and failures of the top five mobile phone vendors. As I mentioned yesterday, Nokia remains king of the hill with 40% market share. Samsung made strides in 2007 and surpassed Motorola to become number two.

"Give credit to Samsung for taking the No. 2 position worldwide from Motorola," says Ramon Llamas, research analyst with IDC's Mobile Devices Technology and Trends team. "For the past few years, Samsung's growth kept pace with the market, but in 2007 the company beat the market almost by a factor of four. Samsung capitalized on replacement handset opportunities in the United States and Europe with a steady stream of mid-range and high-end devices while Motorola spent much of the year addressing inventory challenges across EMEA and Asia. Now that Motorola is implementing a new handset strategy, it will be interesting to watch the hotly contested number two position in 2008."

Sony Ericsson remains in fourth place, with more than 30 million phones sold in the fourth quarter. And LG rounds out the top five, with almost 25 million handsets sold. Both SE and LG have made big improvements in their product lineups and have increased market share with solid high-end devices, such as SE's Walkman series and LG's Voyager phone.

Given the lack of exciting handsets announced at CES several weeks ago, I can understand IDC's prediction for slower growth in 2008. Unless Mobile World Congress, which kicks off in just over two weeks, brings us a new range of phones, 2008 will be off to a very slow start indeed.

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