Mobile handset market on track in Q1

Mobile handset market on track in Q1

Handset shipments reached 296mn units in Q1-08, up 17 percent from 253mn in Q1-07

Monday, May 12, 2008

Motorola remains in free fall
Amid precipitous losses, declining market share and mounting indications of restructuring, US-based Motorola Inc.'s mobile-handset business continued to struggle in the first quarter. The No.-3 ranked handset supplier retained its position with an 9.3 percent share of shipments, down from 12.1 percent in the fourth quarter.

"Although Motorola has tried to maintain a lean operation by instituting workforce cuts across all business units, the company's Mobile Devices group still suffered a disappointing negative 10.5 percent operating profit margin in the first quarter," Teng observed. "Motorola had narrowed its market-share gap with No.-2 Samsung Electronics Co. Ltd. in the fourth quarter. However, Motorola's underperformance in the first quarter cemented the company's rank at No. 3, only slightly ahead of No.-4 ranked, LG Electronics, by 1 percentage point of market share."

Samsung stays solid
Samsung re-inforced its No. 2 position in the first quarter of 2008 at the expense of Motorola. Company handset market share rose to 15.6 percent in the first quarter, up from 13.7 percent in the fourth.

The South Korean electronics giant in the first quarter expanded its presence in emerging markets, namely China and India. In developed regions, Samsung also gained traction with its flagship products and the company continued to benefit from refreshing its product portfolio to address all market segments.

Samsung in the second quarter of 2007 passed Motorola to become the No.-2 handset brand and the company widened its market share lead by 6.4 percentage points in the first quarter. Aside from its market-share gain, Samsung also cut down on unnecessary marketing expenses to improve profitability.

Sony Ericsson slips
Sony Ericsson in the first quarter slipped to the fifth spot, down from No. 4 in the fourth quarter. Company shipments fell by 27.6 percent sequentially and rose by a scant 2.3 percent compared to same period in 2007—massively underperforming the market by either measure. Sony Ericsson's global market share declined to 7.5 percent, down from 9.1 percent in the fourth quarter.

The company blamed its weak performance on slow demand for mid-range to high-range handsets, areas which have traditionally been strong for the company.

Sony Ericsson suffered its largest quarterly sequential revenue decline in its home market of Western Europe, with a drop of 38 percent. The company's handset ASP showed a slight sequential decline of 1.6 percent from the first quarter of 2008 in Euros.

However, the company's ASP declined by 9.7 percent compared to the same period in 2007, which can be explained by its moves to expand its product portfolio to lower-cost handsets that address emerging markets.

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