RealTime IT News

Gartner Says Mobile Device Sales Flat in 2009

Worldwide mobile handset sales in 2009 will come in at about even with 2008 according to a report from Gartner, which is an improvement over earlier projections that sales would decline compared to last year.

It was only due to a surge in sales in Western Europe and an acceleration in the gray market in the third quarter of this year that the mobile handset market was able to overcome an earlier deficit vs. 2008. Gartner now projects worldwide mobile device sales to end users at 1.214 billion units, a nearly flat, 0.67 percent decline from 2008.

Just three months ago Gartner projected a 3.7 percent decline for the year. For 2010, Gartner now thinks sales will grow nine percent year over year.

As in the desktop/laptop and server businesses, the economic climate worldwide caused customers to hold on to their mobile devices a little longer. With disposable income squeezed, consumers extended replacement cycles in mature markets 12 to 18 months longer. Just to show how short the lifespan is for handsets, Gartner puts the average lifespan at 18 to 24 months.

Gartner expects replacement cycles globally to return to normal within two years due to economic recovery, aggressive pricing for smartphones and shorter contracts. Gartner also expects second-hand sales in emerging markets and SIM-only sales globally to stabilize in 2010 and to start decreasing from 2011 as the economy improves.

Rise of the no-name brand phones

A PC phenomenon of no-name brands is beginning to appear in the mobility market, notes Carolina Milanesi, research director at Gartner. The gray market, or "white label devices," are no-name brand phones from Chinese device manufacturers who do not have a license to sell and manufacture devices without a valid internal mobile equipment identity.

This had been a China-only phenomenon but it is beginning to emerge worldwide. "All manufacturers will have to compete with gray-market players as they expand into emerging markets in Asia/Pacific, Eastern Europe, the Middle East and Latin America and bring a lower weighted [ASPs]," Milanesi said in a statement.

This will affect the major players in the market, particularly Nokia, which she feels will take the hardest hit. "We have already seen consolidation in 2009 (talking at a worldwide level) and there will be more to come. We will also see players exiting some geographies or consumer markets," Milanesi said in an e-mail to InternetNews.com

While the worldwide total for the year is flat, there was actually quite a bit of fluctuation, it all just evened out in the end. Western Europe rose seven percent and Asia/Pacific gained six percent, while the U.S. was flat. Latin America dropped 15.8 percent, Eastern Europe by 15.5 percent and Japan by 14 percent.

Fortunately their numbers were so low to begin with that the sheer volume of APAC and Europe offset their double digit percentage drops.

"Japan is very saturated and there was no real technology development that excited consumers in 2009," said Milanesi. "Eastern Europe has seen a huge growth over the past few years and that was coming to an end. This coupled with the negative impact of the economy has caused the decline. Russia in particular had a hard year."