Economic woes slash cell-phone sales growth

BANGALORE, INDIA: According to Gartner, economic woes slashed cell-phone sales growth in the third quarter of this year as consumers waited longer to replace their handsets, and the cell phone market is likely to contract next year.

Though results vary, the global slowdown had a definite effect on sales in both rich and poor countries. Western Europe and Japan were hit hardest, with unit sales below those of a year earlier. Whereas sales were up in  the Americas, Eastern Europe, the Middle East and Africa, with Asia-Pacific marking the strongest growth.

According to Gartner, handset sales worldwide grew six percent in the third quarter, less than half the 16 percent growth that took place in the third quarter of the previous year. Unit shipments of phones grew to more than 308.5 million in the quarter from 291.1 million in the third quarter of 2007.

Carolina Milanesi, analyst, Gartner, says: "The news will be yet more grim in 2009, when worldwide unit sales to decline between one percent and four percent from 2008."

Though new users flocked to cell phones in the third quarter, sales of replacement phones were hit hard. For example, in the APAC region, consumers on average were waiting eight months to replace, rather than just four months as they had previously.

Owing to this drop, sales were either flat or down in mature markets such as Taiwan, Korea and Australia. On the other hand, rising sales to first-time cell users in emerging markets, such as India and China, helped drive unit sales up 13.8 percent to 116.7 million units in Asia-Pacific. The same also drove up sales in Eastern Europe, the Middle East and Africa by 13.1 percent.

On one hand when, unit sales in Latin America rose 5.5 percent, sales in Japan fell 28 percent from a year earlier and were flat from the second quarter and sales in Western Europe were also down, from 47.2 million to 43.5 million.

Despite general weakness in the market for high-end phones, sales of smartphones such as the Apple iPhone and new Research in Motion BlackBerry models drove growth in North America, which was up 4.5 percent in the quarter, according to Gartner.

Motorola suffered most among the major manufacturers, seeing its sales fall from nearly 38 million units to less than 25 million, and its market share drop to eight percent from 13 percent. Sony Ericsson Mobile Communications also lost some market share, while Samsung Electronics benefited from their woes, raising its market share from 14.4 percent to 17.1 percent.

The economy also dampened sales by Nokia, Gartner said, though it gained market share to 38.2 percent and saw sales rise from about 110 million units to nearly 118 million. Samsung, the number-two vendor, increased its sales by 26.3 percent and its market share from 14.4 percent to 17.1 percent.

Sony Ericsson had the third-largest share but was essentially neck-and-neck with Motorola and LG Electronics, Gartner said. Motorola, which has fallen from second place in recent years, is undergoing a reorganisation and still trying to find a superstar product to follow the Razr flip phone.