Worldwide Mobile Phone Market Breaks 200 Million Unit Mark in 3Q05

IDC's latest Worldwide Quarterly Mobile Phone Tracker finds that "worldwide mobile phone shipments rose 19.1% year over year and increased sequentially 8.8% in 3Q05 to reach 208.3 million units" with the top 5 vendors reaching all-time-high shipment levels.

Ramon Llamas at IDC said, "Last year, quarterly mobile phone shipments didn't reach 200 million units until the end of the fourth quarter when vendors were keeping the channels' shelves stocked for the holiday rush. As vendors announced new products earlier this year and accelerated their time to market, we've already reached this milestone."

Andrew Brown at IDC added, "The dominance of the handset subsidy model and 12-month upgrade cycles in Western Europe combined with the introduction of a number of highly publicized, multimedia-oriented high-end handsets to drive demand in a mature market that is witnessing saturation of subscriber growth."

However, Geoff Blaber at IDC noted the challenges the inudtry still faces. He said, "As the mobile phone market becomes increasingly segmented in Western Europe, vendors are under pressure to expand their portfolios in order to comprehensively fulfill market demands with regard to air interface, form factor, technical specifications, multimedia capability, software, and ASP. Although new handsets will substantially assist market volume growth, the challenge for vendors is to meet differing segment requirements without over-extending the portfolio and adversely affecting margins."

IDC ranks the top handset manufacturers by shipments and market share along with highlights for each vendor for the quarter. However as Dean Bubley recently noted, volume market share numbers aren't the best metric for evaluating the market. Handset manufacturer revenue figures, margins and average selling prices would provide more value in determining the health of the industry.

E-Commerce News writes about IDC's report and picks up on this revenues/margins theme. John Jackson at Yankee Group said, "If you look at margins, they are relatively flattish. That would indicate that the majority of volume growth is either coming from lower-end models as it has been, or these vendors are challenged to build incremental margins and to progressively higher tier handsets."

Jackson went on to comment on consolidation in the industry. He added, "We are already seeing the signs of consolidation, whether it is with larger vendors like Siemens exiting the business, or smaller vendors, like a number of Taiwanese and Korean and Chinese companies that have left the business over the last quarter or two."