DvDand Solutions, LLC

According to DigiTimes who compiled the list of world wide shippment of mobile phones, LG has overtaken Motorola, albeit barely, by shipping 100 million mobile phones compared to 99.9 million for Motorola. 2009 promises to be a competitive year for both of these manufacturers with Motorola shipping several devices to Verizon this year and LG has promised to have 100 different devices shipped this year too.
The top 5 shippers of mobile phones for 2008 (with millions of units) were:
Nokia – 470
Samsung – 200
LG – 100
Motorola – 99.9
Sony Ericsson 96.6

This means that the top 5 manufacturers shipped nearly a billion phones in 2008.

[Via Boy Genius Report]

Yesterday, AT&T announced some stellar performance numbers for the 3rd quarter 2008 led by growth in Apple’s iPhone 3G products. AT&T activiated 2.4 million iPhones during the quarter and their wireless data revenue grew to $2.7 billion. More recently, Apple also announced a great quarter with record sales of 6.9 million iPhones during the quarter. However, the future is very uncertain.

The end of last quarter saw the beginning of the economic downturn. We have already seen the effects of the downturn on Nokia which said its Q3 revenue fell by 7% from previous quarter. Sony Ericsson has also been affected by the downturn with their sales down 10% over previous quarter and profits down 1% over last quarter. No one knows how long it is going to last. As such all three companies mentioned above have lowered their forecast for the next quarter and the new year. That was expected, that is not the big story.  

The bigger story is the profit squeeze that the Mobile sector is facing. Take for example AT&T which is considered the bellweather for this sector. As I mentioned earlier, its revenue grew impressively. However, it had to subsidize the iPhones heavily, to the tune of $900 million in the quarter which amounts to a 10¢ reduction in its earnings per share. Clearly, AT&T has to subsidize the iPhones to stay competitive with RIM Blackberry, T-Mobile’s G1 and Microsoft Windows Mobile based phones with various carriers including AT&T. However, it is going to get worse going forward as consumers reduce their spending and shun expensive plans. There is a danger that consumers might shun smartphones all together. As Sanford C. Bernstein analyst Craig Moffett said to BusinessWeek:

you wonder whether the iPhone runs any risk of tilting from being the next cool gadget to suddenly being a symbol of excess.

I have a feeling that not just iPhones, but other smartphones will end up looking like “symbol of excess”. If that happens, RIM will probably be affected the most. Unfortunately for RIM, its Blackberry Storm and Blackberry Bold launches are coming in the first quarter after the major financial crisis and as US heads into a recession. Whether RIM will see the same bounce in sales as Apple did, remains to be seen.

All carriers will see further worsening of their ARPU during Q4 2008, according to the IE Market Research Corp.’s 4Q 2008 United States Mobile Operator Forecast, 2008 – 2010 report. In Q208, the ARPU declined by 1.7% across all carriers. However, Sprint and T-Mobile will be more adversely affected as it takes them longer to get a return on their their investments in WiMax and 3G respectively.

Clearly the current economic climate is beginning to affect the mobile business. Last week RIM released stellar Q2 earnings but with downward guidance for Q3. Another sign of that is today’s announcement by Nokia that it was “renewing” its business mobility strategy. It is shutting down its behind-the-firewall mobility solutions business and is in talks to sell its security appliance business. It is also talking up its relationship with Microsoft, IBM, Cisco and others. To me it appears that Nokia has decided that it does not expect enterprises to invest in mobility solutions until such time as the economic climate improves. As a result of this, Nokia realizes that it will have an uphill task to win sales against entrenched solution providers like the ones named above.

Nokia today announced Nokia Data Gathering, a new software solution to help public sector and non-governmental organizations (NGOs) quickly and accurately collect data on critical issues such as disease outbreaks or disaster relief via mobile devices. This software will be launched in Brazil first in the Northern Brazilian city of Manaus to help fight degue fever there. Nokia will donate this software to NGOs and public sector free of charge. This software can be used to create questionnaire and distribute it to mobile devices via the network.

Gartner, today followed up with a press release reporting that the smartphones sales grew 15.7% in Q2 2008 over Q2, 2007. This amounts to 32.2m units sold in Q2. This is pretty much in line with what other research companies have recently reported and also what Nokia said in its forecast for Q3. Here is the breakup of sales according to Gartner:

What is interesting is that Samsung and LG do not make it on this list considering that they are 2nd and 3rd mobile phone makers worldwide.

NPD Group, a market research company specializing in wireless industry, announced that US consumer mobile phone market declined by 13% year over year in Q2 2008. The mobile phone industry shipped 28 million phones to US consumers during that period. However, on the bright side, the average selling price (ASPs) increased by 14% to $84 during the quarter. Also, digging into the numbers further, the sales of feature-rich phones accounted for bulk of the sales, with keyboard equipped phones sales doubling over same quarter last year.

As far as the manufacturers go, Motorola maintained a small edge over Samsung and LG, accounting for 21% of the market while Samsung and LG were tied at 20%. These three were followed by Nokia at 9% and RIM at 7%.

The carriers share of the market breaks down as follows:

AT&T – 29%
Verizon Wireless – 26%
Sprint – 11%
T-Mobile – 11%

IDC today published a state of the mobile phone industry called the Worldwide Mobile Phone Tracker. According to this report, mobile phones shipments continue to see solid 115.3% growth worldwide in Q2, 2008 despite challenging economic conditions worldwide. This is thanks in large part to the smartphone features like GPS, multimedia and touchscreen. Vendors continue to experiment and provide new functionality even in emerging market. Here is a snapshot of the top 5 vendors courtesy of IDC (shipment are in millions of units).

    Vendor        Q208       Q208      Q207       Q207     2Q08/2Q07
                  Shipments  Market    Shipments   Market     Growth
                                       Share                         Share
Nokia                     122.0       39.9%      100.8      38.0%      21.0%
Samsung                  45.7       14.9%        37.4      14.1%      22.2%
Motorola                  28.1         9.2%        35.5      13.4%     -20.8%
LG Electronics         27.7         9.1%        19.1       7.2%       45.0%
Sony Ericsson         24.4         8.0%         24.9       9.4%       -2.0%
Others                      58.1      19.0%         47.7      18.0%      21.8%
Total                       306.0    100.0%       265.4     100.0%     15.3%

ComputerWorld reviewed some cool future mobile phone technology. Nokia is working on a shape-shifting phone that becomes what is most suitable for the task at hand. But, don’t hold your breath to get your hands on this little puppy. It won”t be available for atleast another 7 to 15 years. In the meantime, other developers are working on wearable phones, like the Handphone from the Italian designer Biodomotica. Or take the Packet phone from Turkish designer, which is a centimeter thick and 2″ square with double-clamshell design. The side flaps fold open to reveal a keyboard for typing email. You can read about these and other future technologies here. Also, as I reported earlier, Samsung has developed a haptic phone that provides 22 different feedback to touch.