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Consumers Resist Upgrading Mobile Phones

The worldwide mobile phone market shipped 35 million fewer units than it did during the same period in 2008, and all indications point to that trend continuing throughout 2009.

The mobile phone industry has long been characterized by its seasonal trends, where the first quarter always delivers a sequential decline after a busy holiday season. However, the drop in this first quarter was especially sharp, according to ABI Research practice director Kevin Burden.

"The 255.6 million handsets shipped represented a 20 percent decline from Q4 2008, which was already a down quarter, and a nearly 12 percent decline from Q1 2008."

Shipment reductions are a new reality for the mobile phone market. "The industry and consumers have gone into protection mode," says Burden. "Protecting profitability has led handset manufacturers to produce less and to operators and retail outlets holding smaller inventories."

Consumers are also realizing that many of the features they desire are already in the handset they currently use, and are willing to forego an upgrade until they have more confidence in their own futures.

The Asia/Pacific region, with handset volumes triple that of the next largest region, had been widely expected to feel more than a fair share of pain due its very troubled economic conditions.

However it posted only an 8 percent YoY decline, which was a spot of encouragement. The Latin American market, however, tempered any encouraging news with a reminder of how deeply the recession can cut.

The region had a nearly 28 percent decline in shipments, the largest decline of any region, due in large part to the devaluation of its currencies leading to higher prices of imported mobile phones.

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