RealTime IT News

Mobile Market Won't Rebound in 2009

Despite the continued runaway success of devices like the Apple iPhone, the global mobile market won't see a return to normalcy before 2010, according to a new report this week.

Global mobile phone shipments are still being buffeted by the recession as research firm IDC cites a 10.8 percent drop for the second quarter, though smartphones continue to perform well.

Handset vendors shipped 269.6 million units worldwide, down 10.8 percent from 302.2 million units in the same quarter last year, according to IDC's Worldwide Quarterly Mobile Phone Tracker report.

The second quarter results, however, mark an improvement from the 17.2 percent decrease seen during this year's first quarter. Still, IDC warned that ongoing challenges stemming from the economic crisis will continue throughout the year. For the full year, IDC said that the mobile market will decline 13 percent.

The market outlook for 2009 remained relatively consistent among the top global vendors, with most predictions still pointing to a downturn of 10 percent for the year for the largest vendors, according to the report.

The top five mobile vendors worldwide listed by IDC are: Nokia, Samsung, LG Electronics, Motorola and Sony Ericsson.

Areas of strength

The sector still has realized some incremental improvement, which IDC attributed to consumer demand for high-end handsets and the manufacturers' ability to shift portfolio mixes to address those needs.

"The challenges from the previous nine months -- aggressive channel de-stocking, foreign exchange volatility, and uncertain demand -- continued to plague the mobile phone market, but were not as severe as before," IDC Senior Research Analyst Ramon Llamas, said in a statement. "Those vendors who were able to adjust quickly were rewarded with greater shipment volumes. Although this tested the handset vendors' abilities to hit a moving target, customers reaped the benefits of lower-costs, even on key high-end devices."

As a subset, the high-end smartphone segment fared better than the overall handset market, posting a 4 percent growth rate in the past year, according to IDC, and continues to be the only bright spot for handset makers this year.

In the U.S., key releases include the launch of the iPhone 3GS from Apple (NASDAQ: AAPL) and Palm's (NASDAQ: PALM) Pre -- both went on sale in June. Also in Q2, Research In Motion (NASDAQ: RIMM) debuted the BlackBerry Tour and Curve 8520 models, and HTC's T-Mobile myTouch 3G came out.

In addition to signature releases boosting shipments stateside, the price cut of the iPhone 3G to $99 is expected to spur price wars among carriers and phone makers.

"Among the big handset vendors, Nokia, Samsung, Research In Motion, and Apple, all beat expectations for smartphones within the second quarter," Ryan Reith, a senior research analyst with IDC, said in a statement. "Apple's price cut on the iPhone 3G reflects a trend we expect to continue in the upcoming quarters, and one that will effectively maintain competitive pricing within mature markets."

It appears the trend is already taking off as Verizon recently slashed the price of the BlackBerry Storm to $99 as it readies an update to be rolled out this year.

In another emerging trend, the IDC report says there's increasing demand for pre-paid handsets from budget-minded consumers, which was signaled earlier this week when Sprint acquired Virgin Mobile and reported 938,000 new prepaid customers.