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In Declining Mobile Phone Market, Samsung Maintains Lead in Sales

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The new order pushes HTC out of the top five mobile phone vendors.

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MINYANVILLE ORIGINAL The worldwide mobile phone market declined 1.9% year-on-year in the second quarter of 2012 while Samsung (SSNLF) maintained its lead over Nokia (NOK) and Apple (AAPL) as the world's top mobile phone vendor. According to IDC's European Quarterly Mobile Phone Tracker, vendors shipped 42.1 million units during the quarter, a drop of 1.9% year-on-year.

The feature phone segment continued to decline, with shipments down 30% to 14.7 million units. The segment continues to be supported by the lowest price levels: 58% of the total feature phone shipments were under the $75 price point and the fastest growing segment is for phones at half that price.

Smartphone shipments increased 26.6% year-on-year to 27.4 million units during the quarter.

"The second quarter was impacted by a weaker economic environment in Western Europe, which contributed to lower demand," said Francisco Jeronimo, European mobile devices research manager at IDC. "Moreover, there are rumors that a number of devices will be unveiled in the third quarter and mobile operators are focused on clearing stocks ahead of the new launches. The Samsung Galaxy S III was the only major product release in the second quarter, and therefore the biggest seller in the quarter, which contributed to Samsung's dominance in the market. The third quarter will be flooded with a number of devices on different operating systems. The new devices may represent major developments from previous versions, and current devices may not be upgradable to the new platform releases. This has led consumers to postpone their upgrades and wait for the new 'crown jewels' from the major OEMs to be unveiled."

Android continued to increase its market share, supported by Samsung's strong performance. Google's OS grew 71% year-on-year, only outpaced by Windows Phone 7, which grew 874% year-on-year. Android now accounts for 65% of total smartphone shipments in the region.



Samsung achieved its highest market share, accounting for 41% of total shipments, beefed up by the smartphone segment. As in previous quarters, the success of the Galaxy line-up, particularly the Galaxy S III this quarter, was the main contributor to higher market shares in both volume and value. The company maintained its lead over Nokia, which had been the global market leader since the inception of IDC's Mobile Phone Tracker in 2004.

"The halcyon days of rapid growth in the smartphone market have been good to Samsung," said Kevin Restivo, senior research analyst with IDC's Worldwide Mobile Phone Tracker program. "Samsung has used its established relationships with carriers in a mix of economically diverse markets to gain share organically and at the expense of former high fliers such as Nokia."

Nokia stabilized its market share. Despite the 10% year-on-year decline in shipments, the decline in market share has slowed compared with previous quarters. The company saw good good performance of Dual-SIM and Asha devices in the feature phone segment. In the smartphone segment the Lumia range continues to be the best selling Windows Phones, overtaking Symbian in unit shipments for the first time.

The death knell of Symbian as a widely used smartphone OS was sounded last year when Nokia said all of its smartphones would eventually be powered by Windows Phone OS.

Apple's sales were impacted by the rumors surrounding a new iPhone expected to be revealed on September 12, and shipments slowed as consumers postponed their replacements until a new device is available.

Sony/Sony Ericsson (SNE) improved its performance and overtook Research In Motion (RIMM). The company's smartphone portfolio has performed very well, particularly the latest Sony Xperia S and Xperia U, supported by a number of marketing campaigns across Europe.

Research In Motion continued to struggle and shipments fell 37% year-on-year to 1.9 million units, levels not seen since 2009. Its market share also declined to 4.5%, from 7% in 2Q11. Heavy discounts have prevented the company from recording an even worse performance while it transitions to smartphones running on the new BlackBerry 10 operating system. The company also continues to lose market share in the enterprise segment, with its share here being cut by half in the past year.



The second quarter was not kind to HTC (2498.TW). The Taiwanese phone maker was still among the top five smartphone vendors in the first quarter, but has now dropped off of the list. The company is staking future success in large part on its One X and S products. For more on HTC's woes, click here.

Top Western European Mobile Phone Vendors: Total Shipments and Market Share, 2Q12 Smartphones and Feature Phones (Units in Millions)



Source: IDC European Quarterly Mobile Phone Tracker
No positions in stocks mentioned.
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