Low-end phone demand drives Q2 handset sales leap

Motorola and Sony Ericsson see the highest growth

By Tony Smith, 28th July 2005

Regcast training : Hyper-V 3.0, VM high availability and disaster recovery

Motorola has extended its lead over Samsung, its rival for the number two slot in the list of the world's top mobile phone makers, market watcher IDC said today as it reported shipment figures for the year's second quarter.

Nokia retained its healthy market lead during Q2, shipping 60.8m units to take 32.2 per cent of the market, up from 53.8m units - for a well-above average growth rate of 13 per cent - and a 30.9 per cent share in Q1.

Motorola's share rose to 18 per cent from 16.5 per cent in Q1, while Samsung's share fell, from 14.1 per cent to 12.9 per cent, further widening the gap between the two vendors from the last few quarters of 2004 when they were running neck and neck. Motorola shipped 33.9m handsets, up 18.1 per cent, while Samsung experienced a sub-percentage point decline in shipments, to 24.4m units.

Fourth-placed LG shipped 12.1m phones in the quarter, up nine per cent, to give it 6.4 per cent of the market - the same as the previous quarter. Sony Ericsson, on the other hand, grew its share from 5.4 per cent to 6.3 per cent, courtesy of a 25.5 per cent leap in shipments, giving it the highest growth rate of the top five vendors and confirming the vendor's own claim that it increased its market share during the period. It shipped 11.8m phones in Q2, from 9.4m in Q1.

During the second quarter, handset shipments jumped 7.3 per cent over the previous quarter and 16.3 per cent year on year to 188.7m units, the researcher revealed.

That the increase was in part due to "impressive" shipments of entry-level phones to developing markets comes as no surprise. However, strong demand for low-end devices in mature markets did raise a few eyebrows.

"Despite all the interest and excitement over cutting edge devices, there continues to be a demand for simple voice-only phones that appeal to broad customer segments, even in mature markets like North America," said IDC Mobility Group research analyst Ramon Llamas.

If this aspect of the quarter becomes a trend, it will put pressure on the vendors' revenue and income expectations as the balance shifts toward lower-priced devices. ®