Downturn takes hold in mobile markets

The latest research into the state of the global mobile market has found the global economic downturn has started to take its toll.

Worldwide mobile phone sales to end users declined 4.6 per cent in the fourth quarter of 2008 compared to the same period in 2007, totalling 314.7 million, according to Gartner today.

Although the industry did experience growth for the year overall, with worldwide sales surpassing 1.22 billion units in 2008 amounting to a six per cent increase over 2007, the top five mobile phone vendors all experienced a decline in sales during the fourth quarter.

Carolina Milanesi, research director for mobile devices at Gartner, said not even the Christmas rush for the latest handsets could offset the decline.

"Consumers were concerned about taking on the contract associated with the most attractive products on the market," she said. "Consequently, mobile devices in both emerging and developed markets experienced the lowest quarter-on-quarter growth of two per cent ever recorded in a fourth quarter."

Milanesi predicted that, in response, mobile phone vendors would increase their efforts to reduce the amount of inventory they hold.

"In the second half of 2009, the channel will have to start re-stocking and this will help sell-in volumes," she predicted. "This will not mark the start of a market recovery we do not expect demand to stabilise before 2010."

From a regional point of view, longer replacement cycles affected the market in Western Europe throughout 2008. But, by the end of the year, sales had deteriorated rapidly across the world, spreading to emerging markets.

In Europe, Middle East, and Africa (EMEA), sales in the fourth quarter of 2008 declined 3.5 per cent year-on-year. "Reduced consumer confidence, combined with lower subsidies from operators, discouraged users from upgrading their current device," said Annette Zimmerman, Gartner senior research analyst at.

Gartner said the top five mobile vendors respectively were Nokia, Samsung, Motorola, LG and Sony Ericsson. Nokia still dominates with 38.6 per cent of market share.

At the same time, Juniper Research also today estimated that the mobile entertainment market will reach nearly $36 billion (25.5 billion) by 2010, revenue growth would be markedly lower if the global recession fails to bottom-out over the next twelve months.