Global Handset Shipments Fall at Fastest Rate in History
Global Handset Shipments Fall at Fastest Rate in History
1st May , 2009
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Europe : Strategy Analytics forecasts 266 million units in Q2 2009, for an annual decline of 10%. Handset vendors shipped 245 million cellphones worldwide in Q1 2009, down a huge 13% from 282 million units a year earlier. This was the fastest rate of annual decline in handset shipments since our records began. The global economic recession amplified the effects of a seasonally low quarter, as retailers de-stocked inventory and consumers delayed purchases because of financial fears.
All of the top five handset vendors grew at negative rates. Samsung performed best, slipping only 1% annually, while grabbing a record 19% global share. Nokia, Sony Ericsson and Motorola continued to disappoint, prompting workforce reductions from all three. Analysis
1. Nokia shipped 93.2 million handsets worldwide in Q1 2009, down 19% from 115.5 million units in Q1 2008. Its growth rate underperformed the industry average for the third quarter in a row. With 38% global marketshare, Nokia lost 3 points of share compared with the year-ago quarter, due to weak shipments across five of its six major regions. Sales of the flagship Nseries smartphone portfolio halved annually, to just 5 million units. The handset division’s operating margin slipped further to 10%, beating Q4 2008 as the least profitable quarter of this decade. In an effort to curb operational expenditure, Nokia has announced several rounds of layoffs, cutting roughly 2k jobs in recent months.
2. Samsung shipped 45.8 million handsets worldwide in Q1 2009, down 1% from 46.3 million units a year earlier and 13% from last quarter’s 52.8 million. Even with the decline, Samsung was the top-performing megavendor, beating the industry’s average growth rate and increasing the company’s global marketshare to an all-time high of 19%. Profits jumped after Samsung capped its marketing spend, and the company led the top-five players with an operating margin of 12% in Q1 2009. Samsung continued its assault on the smartphone market by unveiling an Android-powered smartphone, the I7500, which will launch in June 2009. Samsung is the first of the big 5 global brands to announce an Android handset and it will provide tough competition for the existing Android leader, HTC of Taiwan.
3. LG shipped 22.6 million handsets worldwide in Q1 2009, down 7% from 24.4 million units in Q1 2008. The company joined South Korean neighbor Samsung with above-average growth and a small improvement in marketshare. With 9% of the global handset business, LG continued to solidify its third place in the industry. . A steady stream of attractive devices, an improved retail presence and more visible marketing have been among the secrets of LG’s success. LG’s operating profit improved to 7% during the quarter, although it is still below the double-digit margins from early 2008. Like Samsung, LG did not announce any major layoffs during the period.
4. Motorola shipped 14.7 million handsets worldwide in Q1 2009, down a sizeable 46% annually. Its operating loss reached a hefty US$0.5 billion. The vendor introduced few new models during the quarter, as it focused its efforts on revamping its portfolio and reducing operational expenses. Motorola has cut around another 3k jobs in recent months. New handset introductions, particularly Android models, remain critical for Motorola’s recovery over the coming months.
5. Sony Ericsson sold 14.5 million handsets worldwide in Q1 2009, falling a huge 40% from 24.2 million units in Q4 2008. Growth remained below the industry average for the fifth consecutive quarter, and operating profits fell to an astonishing minus 21%. Sony Ericsson’s lack of presence in the high-value smartphone market continues to hamper the firm’s prospects. Sony Ericsson joined Motorola in announcing a further workforce reduction of roughly 2k employees in order to diminish its cost base. Apple shipped a better-than-expected 3.8 million iPhones worldwide in Q1 2009, up a healthy 123% from 1.7 million units a year earlier. Its global marketshare hit 2% and it is in 7th position. The increased global availability of the popular iPhone and a quickly-expanding iTunes App Store library drove the growth. Apple’s 3.8 million iPhone shipments exceeded those of one of its main touchscreen rivals, the Nokia 5800, which recorded slightly lower global volumes of 2.6 million units during the quarter. We expect Apple to launch one or more new models in the coming months as it seeks to maintain its breakneck growth rate.
Apple shipped a better-than-expected 3.8 million iPhones worldwide in Q1 2009, up a healthy 123% from 1.7 million units a year earlier. Its global marketshare hit 2% and it is in 7th position. The increased global availability of the popular iPhone and a quickly-expanding iTunes App Store library drove the growth. Apple’s 3.8 million iPhone shipments exceeded those of one of its main touchscreen rivals, the Nokia 5800, which recorded slightly lower global volumes of 2.6 million units during the quarter. We expect Apple to launch one or more new models in the coming months as it seeks to maintain its breakneck growth rate.
MARKET OVERVIEW
After a second consecutive quarter of market contraction, handset vendors sold just 245 million devices worldwide in Q1 2009. Shipments fell a huge 13% from 282 million units a year earlier. The global economic recession has been causing retailers to de-stock inventory to improve cashflow, while many worried consumers have been down-trading or delaying their new handset purchases. Our records indicate that Q1 2009 represented the fastest ever decline in annual shipment growth since the modern cellphone industry began in 1983. Q3 2001, when demand tumbled minus 11%, was the previous worst quarter.
Strategy Analytics forecasts 266 million units in Q2 2009, for an annual decline of 10%. We expect the remainder of the first half of 2009 to be volatile, as prevailing economic conditions continue to affect consumer spending behavior. Handset industry growth rates should improve gradually in the second half of 2009, as retailers rebuild their inventories with compelling new models and consumers slowly regain confidence in their financial position.