Gartner: mobile phone sales to resist economic downturn

According to Gartner, global sales of mobile phones surpassed 1.15 billion units in 2007, a 16 percent increase from 2006 sales of 990.9 million.

Carolina Milanesi, research director for mobile devices at Gartner explained that emerging markets contributed to the majority of the growth, while mobile phones with advanced features were the big sellers in mature markets.

“Emerging markets, especially China and India, provided much of the growth as many people bought their first phone,” said Milanesi. “In mature markets, such as Japan and Western Europe, consumers’ appetite for feature-laden phones was met with new models packed with TV tuners, global positioning satellite (GPS) functions, touchscreens and high-resolution cameras.”

Mobile phone sales at the end of 2007 were consistent with the yearly trend, as fourth quarter sales reached 330 million units. Milanesi predicted that the growth rate will decline in 2008 as markets become increasingly saturated.

“After another strong year, we expect the growth in sales of mobile devices to end-users will decelerate in 2008 and fall to about 10 percent growth,” said Milanesi. “However, the global mobile devices market will remain relatively immune to a recession in the US and Western European economies as the majority of growth in 2008 will come from emerging markets.

Milanesi also noted the mature Western Europe and North America markets are driven by operator contract terms and replacement cycles, which will translate into approximately 30 percent of the global mobile device market in 2008.

A Gartner report revealed that Nokia achieved 40 percent market share in the fourth quarter of 2007 when it sold more than 133 million phones globally. Despite some component shortages, the mobile phone vendor increased its market share sequentially in all regions except North America. The analyst firm stated that in emerging markets, consumer demand was focused on products such as the 1110, the 1600 and the 2630, while in mature markets such as Western Europe high-end phones including the N95, N82 and N73 were being purchased.

According to Gartner, Nokia needs to continue to improve its portfolio in 2008, offering not only more applications and functions, but also novel designs and improved user interfaces.

The report also found that in the same period, Samsung maintained second position. Gartner asserted that the vendor relied on its Ultra and Ultra II family of products to widen the gap between it and third-placed Motorola, adding that in 2008 Samsung needs to diversify its portfolio further with more form factors and colours so that single products stand out from the overall line-up.

Milanesi commented that manufacturers needed to keep a close eye on the trends in the mobile phone market in order to meet consumer demand.

“Phone manufacturers need to continuously adapt their portfolios to respond to operators’ demands for open platforms, lower pricing and more personalisation,” recommended Milanesi. “They should also try to meet consumers’ desires for fashionable, easy-to-use phones.”

In APAC, 112 million mobile devices were sold in the fourth quarter of 2007. This represents 9.6 percent growth over the previous quarter, revealed Gartner.
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Driving factors for growth in emerging markets in Asia/Pacific included huge numbers of new subscribers, lower-priced phones based on wideband code division multiple access (WCDMA) technology, as well as ultra-low-cost CDMA phones and low-cost global system for mobile (GSM) phones,” said Ann Liang, principal research analyst for mobile terminals, Gartner.
IDC revealed that Telstra’s plans to switch on ADSL2+ in more than 900 exchanges could potentially have significant flow on effects to the greater communications market, in particular Australian regional and rural consumers.

According to the report, there is a “bigger picture” situation evolving. David Cannon, program manager of telecommunications at IDC said: “We believe that the announcement from Telstra to activate its remaining ADSL2+ ready exchanges as a result of ministerial assurance and the government’s requirement to cull more than $10 billion of funding are related. As a result the Opel Pty Ltd funding will potentially be a casualty of larger macro economic inflation management processes.”

Cannon added that the activation of the ADSL2+ exchanges gives regional and rural communities metro-like broadband services that will counterbalance any negative public sentiment should the Opel funding be withdrawn.

IDC predicted far-reaching consequences for the industry if the ‘macro economic inflation management’ assumption is realised. The analyst firm stated that the announced Optus 3G network build to 96 percent of Australians will not go ahead, remaining only in major metro/regional areas. This will effectively provide Telstra with a competitive stay of execution in regional and rural Australia.

The report also stated that Vodafone may need to re-evaluate its plan to build out its own 3G coverage through its network agreement with Optus. In extreme circumstances, the Optus delay could result in Vodafone reassessing its commitment to the Australian 3G mobile market and may trigger another network partnership deal or a possible market exit.

The balance between the ACCC and the government’s relationship will be increasingly strained, according to IDC. Consequently, the analyst firm claimed the government’s decision to provide assurances to Telstra may be interpreted as a backdown, encouraging Telstra to ignore the regulator and engage in legal battles for extended periods of time while Telstra enjoys market share monopoly and profits.

From a consumer perspective, the ‘macro economic inflation management’ assumption will affect fixed and mobile broadband customers in regional and rural areas, the report stated. These consumers will apparently continue to pay higher fees than those enjoyed by their metro counterparts for an extended period of time as a result of lack of competition.
In a recent end-user research report, IDC found that more than 50 percent of Australian SMBs exhibit entrenched usage behaviour of mobile and wireless technology.

The report named ‘Australia Small and Medium-Sized Business Wireless and Mobility Technology Adoption 2007’ investigates mobile and wireless technology usage, adoption, and preferences of Australian SMBs.

According to the report, mobile phones are strongly entrenched in Australia’s current working culture. As a result, SMB mobile data spending is steadily increasing, primarily driven by mobile email, courtesy of the widespread availability of 3G and 3.5G mobile networks.

“Business adoption and usage of mobile email is the most dominant application,” said Jean-Marc Annonier, research manager for SMB Markets, IDC. “However ‘second-wave’ business productivity applications, such as field force and sales force automation, are currently idling as developments are in still in progress. Leading mobility providers are taking this opportunity to revamp and streamline their communications solutions.”

Annonier asserted that there is a great deal of opportunity to educate the SMB market about the benefits of mobilising business communications and eventually, applications.

“Developments around enterprise mobility suites as well as the hype around Unified Communications creates a very valid case in demonstrating that ‘first-wave’ enterprise mobility has a great deal of potential left untapped and is a powerful catalyst to mobile applications,” he said. Other findings of the report include the continuing development of dual-mode mobile handsets. IDC claimed mass-market handsets such as Nokia’s E65 are beginning to make an impact, and highly anticipated mobile phone releases such as RIM’s BlackBerry range are now offering Wi-Fi connectivity, opening the door to developments such as VoIP and mobile email over Wi-Fi and 3G.

The study also took an in-depth look at the “prosumer” effect, claiming it is driving mobility adoption.