Technology | Media | Telecommunications

Tuesday, April 29, 2008

Mobile Phone Market Shipment Downturn

The worldwide mobile phone market experienced an expected sequential downturn in shipments following a busy holiday quarter.

According to IDC, vendors shipped a total of 291.6 million units during the first quarter of 2008 (1Q08), down 11.6 percent from the 330.8 million units shipped during the previous quarter (4Q07) and up 14.3 percent from the 255.0 million units shipped during 1Q07.

While the first quarter results are in line with IDC's 2008 forecast, concerns over the economy may negatively impact handset purchases as the year progresses.

"The mobile phone market will be under increased pressure from a number of factors that compete for users' attention and wallets," said Ramon T. Llamas, senior research analyst with IDC's Mobile Device Technology and Trends team.

"Disposable income is being eroded by rising food and fuel prices and worries about global financial markets and slow economic growth are creating a cautious outlook for the months ahead. Against this backdrop, many emerging markets continue to offer tremendous growth potential and IDC expects highly competitive pricing and innovative service plans will keep the overall market on track for the year."

Demand for handsets in the low cost segment will remain present in certain emerging markets throughout 2008, driving worldwide shipment growth. In contrast, more mature regions are increasingly characterized by highly competitive markets for replacement handsets and somewhat slower shipment growth.

"As predicted, most mobile phone vendors experienced a lull in the first quarter of 2008 with the exception of LG," said Ryan Reith, senior research analyst for IDC's Worldwide Mobile Phone Tracker.

Continued growth in the low cost segment will mean average selling prices (ASPs) will be generally lower than in the past, but this will be balanced somewhat by further expansion in the converged mobile device or smartphone segment, especially in mature markets.