The Q2,2011 mobile phone shipment volumes and the market share report by IDC has a few interesting take aways. The report estimates that worldwide mobile phone market grew 11.3% year over year in the second quarter of 2Q 2011, despite a weaker feature phone market, which declined for the first time since 3Q09. Vendors shipped 365.4 million units in 2Q11 compared to 328.4 million units in the second quarter of 2010. The 11.3% growth was lower than IDC’s forecast of 13.3% for the quarter and was also below the 16.8% growth in 1Q11.
However, the feature phone market shrank 4% in 2Q11 when compared to 2Q10. The decline in shipments was most prominent in economically mature regions, such as the United States, Japan, and Western Europe, as users rapidly transition to smartphones. This was the first decline since Q3 2009 and reflected a combination of conservative spending and continued shift to smartphones.
For the overall market to grow by double digits year over year, despite the decline in feature phones, is testament to the strength of the global smartphone market. While this is not a new trend – smartphones have been the primary engine of growth for the last several quarters. However, the 2Q 2011 timeline is an milestone, because it does mark something of a transition point, as demonstrated by the growing number and variety of smartphones featured in the vendors’ portfolios. One might as well add a subdued demand from Japan given the Earthquake and component shortages.
In the OEM space, the same story plays out with Nokia loosing close to 10% market share and with shipments falling 20% YOY. High channel inventories in China, competition from Samsung in mi end and Chinese white label manufacturers in low end and a free fall on the smartphone space have led to Nokia’s loss. The story rings the same for LG as well which lost 19% YOY and 3% market share points.
Samsung which has had an impressive run lately both in entry and mid level in Europe and Asia and has catapulted to No.2 slot on the global smartphones list has registered 10% growth which is a shade lower than the 11% market expansion.
Apple thrived in China thanks to strong iPhone 4 demand. If Apple was to release a low cost iPhone as rumored, it could make major inroads and overthrow LG from the no.3 spot. That is quite phenomenal considering that Apple did not sell phones till about 4 years back.
China-based vendors gained share in India, West Asia, Africa and Southeast Asia at the low end.
In Western Europe, the market declined sequentially compared to the first quarter. The feature phone market declined while smartphone shipment growth slowed as phone makers and carriers reduced inventories in advance of expected third-quarter product launches.
Civil unrest in West Asia, North Africa and other Arab countries, impacted sales negatively.
In North America, smartphones once again took center stage, propelled by lower prices, key device launches, and enhanced channel marketing. In particular, Android-based devices extended their lead in the United States and took leadership in Canada thanks to Samsung, Motorola, HTC, and LG. Meanwhile, demand for feature phones continued to slide, but there still existed pockets of interest for voice-centric and quick-messaging devices.
The Latin America market growth was driven by low-cost smartphones, specifically those with social networking features. Lower smartphone prices, including those of the Android variety, are driving smartphone penetration in several Latin American countries. Price is expected to be a point of differentiation – as well as applications and device features – between Android players in future.