Mobile device sales to bounce back in 2010

Worldwide sales of mobile devices in 2009 beat gloomy expectations despite a small decline and are forecast to increase by nine per cent next year, according to a Gartner report released today.

The research recorded a 0.67 per cent decline to 1.214 billion units in 2009, but this beat the company's September estimate of a 3.7 per cent decline thanks to stronger-than-expected third quarter sales in Western Europe and an acceleration in the grey market in Asia, Eastern Europe and Latin America.

Gartner research director Carolina Milanesi said that acceleration in the grey markets, which have now extended into areas such as Russia and India, accounted for around 250 million sales of mobile devices.

"There's a belief that China is the only country with a strong grey market and that phones on this market are only those worth US$50 or less. However grey markets are moving into new areas and devices on offer are now exceeding US$70 ," she said.

However, Milanesi said she expected grey market sales to decline in 2010 as governments took a firmer stance on devices without international mobile equipment identity (IMEI) numbers, citing the recent shut down of 30,000 devices in China.

Gartner said one cause of the slight overall decline was longer replacement cycles due to the tough economic conditions.

The company said it expected to see normal replacement cycles return globally in 2010, which would help sales increase by nine per cent to 1.32 billion units.

Smartphone sales will also increase as the average price drops by three per cent in 2010 and shorter contracts are made available as demand grows.

Gartner said it expects smartphone sales to account for 19 per cent of all mobile sales by 2010, rising to 26 per cent in 2011, and 32 percent by 2012 as users increasingly see the benefits of smartphones.

"Even at the start of 2009 smartphones were supply driven from the manufacturers but now users are far more demanding of their mobile devices and many businesses realise that sales staff can be more productive with a smartphone," Milanesi added.

The analyst also noted that app stores have also helped grow the demand for smartphones by making users more aware of the functionality the devices can offer.