Nokia Corp. retained its leadership on the market of mobile phones in the third quarter as sales of smartphones in Q3 2011 slowed down. At the same time, shipments of Apple iPhones declined quarter-over-quarter and it may be the time for Samsung Electronics to try the crown of the largest smartphone vendor, a victory both for Samsung and Google Android.
The worldwide mobile phone market grew 12.8% year over year in the third quarter of 2011 (Q3 2011), as smartphone growth declined in key mature markets. According to the International Data Corporation (IDC), vendors shipped 393.7 million units in Q3 2011 compared to 348.9 million units in the third quarter of 2010. However, the 12.8% growth was higher than IDC's forecast of 9.3% for the quarter and stronger than the 9.8% growth in Q2 2011.
It was also the second-lowest growth rate for the overall mobile phone market over the past two years; a reflection of delayed smartphone purchases and conservative consumer spending last quarter. Economically mature regions, such as the United States and Western Europe, were hardest hit as shipment volume to both regions declined on a year-over-year basis.
“The combination of economic uncertainty and anticipation over fourth quarter or late third quarter product releases caused some consumers to delay their smartphone purchases. Many waited for products such as the iPhone 4S, which was announced after the quarter closed, or Research in Motion's BlackBerry 7 phone series, which were released in the final weeks of the quarter,” said Kevin Restivo, senior research analyst with IDC's worldwide mobile phone tracker.
Nokia reversed a global market share on a sequential basis last quarter thanks to stronger feature phone sales in key regions as well as the clearing of inventory backlogs in traditional strongholds, namely China and Europe, which led to a sharp year-over-year shipment and share decline last quarter. Nokia's smartphone fortunes could improve in quarters to come now that it has introduced the Nokia Lumia devices, powered by Windows Phone 7, to markets where its brand is still relatively strong and in areas where the company has lost share over the past two years, IDC believes.
Samsung registered double-digit growth compared to the third quarter a year ago and also outpaced the market. The company's growth was again driven by smartphone sales, such as the Galaxy S II. Smartphone sales were notably higher in emerging markets including China. Samsung outpaced the feature phone market as well in terms of growth. The vendor didn't close the market share gap on Nokia for the top mobile phone position, but it remains within striking distance.
LG Electronics maintained its position as the number 3 mobile vendor worldwide for the twelfth quarter in a row, but continued soft demand for both its feature phones and smartphones led to volume levels not seen since Q2 2007. With only a few new devices launched and an aging feature phone portfolio, LG's warnings of lower year-over-year shipment volume appears to have come to fruition. By the end of the year, LG's grasp on the number 3 position may be loosened as Apple's aggressive smartphone campaign takes hold in 4Q 2011.
ZTE jumped into the number 4 position thanks to momentum carried into 3Q 2011 with key devices shipping into strategic regions. In China, ZTE has nearly doubled its smartphone volumes from the previous quarter, while within North America, ZTE's entry-level voice-centric phones at AT&T have gained greater depth. At the same time, ZTE's target of 12 million smartphone shipments worldwide in 2011 became more of a reality with the introduction of two new Android-powered smartphones for the North American market.
Apple gained share and posted the third-highest growth rate of any Top 5 vendor but dropped to the number 5 position globally. Global iPhone shipments declined sequentially during the same quarter that company founder Steve Jobs handed the CEO reins to Tim Cook. The decline, not coincidentally, happened as Apple readied itself for the 4S launch, which many waited for. Apple's ability to upgrade 3GS users to the 4S, for example, and make continued inroads into developing economies, where it has been less successful, will help dictate the company's smartphone fortunes in the future.
However, stresses IDC, smartphones drive the overall mobile phone market and will continue to do so in the quarters and years to come.
"Smartphone centricity continues to be the hallmark of the mobile phone market. Two years ago, smartphones comprised just a small portion of overall shipments among the leading vendors. Today, that proportion has grown considerably, thanks in large part to LG, Motorola, Samsung, and Sony Ericsson making Android smartphones a priority. At the same time, the growing presence of companies focused exclusively on the smartphone market - Apple, HTC, and RIM - also demonstrate the impact that smartphones have had on the mobile phone market as a whole," said Ramon Llamas, senior research analyst with IDC's mobile phone technology and trends team.