Sluggish Economy Not Sinking Smartphone Sales


A sluggish economy isn’t stopping users from buying new and increasingly powerful mobile phones, as the industry continues to experience double-digit growth over last year, a new IDC report found.

Device makers shipped 306 million units during the second quarter of the year — up 5.6 percent from last quarter and a 15.3 percent increase from the second quarter of 2007.

“Communication is vital to everyone’s daily lifestyle, and nowadays, it happens to be mobile communication — as compared to 10 years ago when wireline communication was a standard,” Ryan Reith, IDC senior research analyst , told

“What this shows is that this market is powerful and still has room to grow,” he said.

The report is the latest testament to the staying power of mobile phones despite macroeconomic conditions slowing consumer spending elsewhere. In May, a study from J.D. Power and Associates found that consumers are willing to pay extra for advanced phone features, driving costs to their highest level in years.

In the IDC report, the high-end mobile device segment in particular continues to see very strong demand, with sales growing at a 40 percent year-over-year rate.

“This tells us that not only are people still buying phones, but they are buying that ones that come with larger price tags,” Reith added.

Popular smartphone features spurring such trends include GPS navigation and Wi-Fi capability, according to Reith.

“You hear a lot about touchscreens because of the iPhone effect, but GPS and Wi-Fi are very cool applications that are making peoples lives easier,” he said.

IDC said vendors are pushing out a wide range of mid-priced and high-end devices to meet demand for more feature-packed phones and to keep the sales channel full. Samsung, for instance, is benefiting from high-end devices such as the Soul, F480, and the launch of the M800, IDC said.

Partially as a result, Samsung retained the No. 2 slot in worldwide sales, according to IDC. The Korean electronics giant reported 22 percent year-to-year growth in unit shipments during the second quarter, totaling 45.7 million.

Market leadership remains dominated by Nokia, however, which posted 21 percent growth in worldwide shipments compared to a year earlier. The Finnish company shipped 122 million devices during the quarter.

While high-end sales helped its rival, Nokia’s (NYSE: NOK) success came more as a result of its “relentless focus on and ability to meet demand within emerging markets.” In particular, the company saw its best quarter to date in shipments within India, IDC said.

Despite continued problems facing its handset business, Motorola managed to stay ahead of LG Electronics during second quarter to hold onto the No. 3 spot.

The handset maker debuted several phones with advanced features, including the ROKR E8, two new MING devices, and several new 3G devices, according to IDC.

In its earnings report this week — following a better-than-expected quarter — Motorola (NYSE: MOT) said it plans to ship 34 new models by the year’s end.

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