Friday, May 19, 2006

IDC: Shift to 3G Handsets Accelerates as European Mobile Phone Market Polarizes Around Top 3 Vendors in 1Q06

According to the latest numbers from IDC, "the Western European mobile phone market (consisting of traditional mobile phones and converged devices) maintained double-digit growth in the opening quarter of 2006 as shipments increased by 11% year on year to reach 40.7 million units, compared to 36.8 million in the corresponding quarter of 2005."

Geoff Blaber at IDC said, "Although mounting saturation in subscriber growth across Europe is increasingly inhibiting handset shipment growth, the market in 1Q06 matched the growth rate exhibited in the opening quarter of 2005 despite a lack of impetus commonly provided by new handset launches. Mounting consumer migration towards WCDMA devices driven by competitive service pricing and ASP declines, combined with highly aggressive handset subsidies across operator portfolios, was a key market performance driver in 1Q06."

IDC found that "despite relatively healthy unit volumes, intense vendor competition, ASP declines, and sustained scrutiny of handset portfolios and costs by mobile operators continued to have a negative impact on vendor profit margins. Furthermore, downsizing of portfolios meant the top 3 vendors accounted for almost 70% of all traditional mobile phones shipped, compared to 62% in 2005."

Andrew Brown at IDC said, "Operators' scrutiny of handset portfolios is now beginning to significantly impact vendors without the capability and resources to meet stringent operator demands across multiple product lines with regard to software and hardware customization, UI, and form factor design. Such vendors need to focus R&D towards operator requirements by integrating such components to produce closely positioned products that serve very specific segments."

IDC stated that "converged devices increased their proportion of the total market to 7% in 1Q06 from 5% in the opening quarter of 2005 as consumers continued to migrate predominantly towards S60 devices from high-end feature phones. However, converged device market growth of 43% year on year was disappointing due largely to portfolio transitioning for a number of vendors and a general lack of new device releases."

Jean-Philippe Bouchard at IDC commented that "Strong anticipated converged device growth in both consumer and enterprise segments, combined with the introduction of new form factors and technology improvements, particularly with regard to imaging, will drive a healthy renewal market in 2006. Consequently, IDC forecasts total mobile phone market growth of just under 10% with shipments expected to exceed 185 million units."

Western European Mobile Phone Shipments, 1Q06

Vendor 1Q06 Shipments (M) Share 1Q05 Shipments (M) Share Growth
Nokia 13.8 34% 11.8 32% 17%
Motorola 7.3 18% 5.0 14% 44%
Samsung 7.1 17% 6.0 16% 19%
Sony Ericsson 3.7 9% 3.0 8% 24%
BenQ Siemens 2.4 6% 2.9 8% -16%
Others 6.3 16% 8.1 22% -22%
Total 40.7 100% 36.8 100% 11%
Source: IDC, 2006
Notes: For comparative purposes BenQ Siemens' shipments in 1Q06 are placed alongside Siemens' branded shipments from 1Q05. BenQ acquired Siemens' Mobile Devices business in October 2005, with the first BenQ Siemens branded products appearing in 1Q06.