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Good news for cell phone component manufacturers as ABI Reserach reports that the mobile handset market is set for a stellar performance in 2010. 3Q-2010 is up 346.2 million in handset shipments. For the first three quarters of the year, YoY growth has been hovering around 20%. “This is a remarkable feat, irrespective of the rebound effect following the deferred handset purchases during the economic recession,” says Jake Saunders, VP for forecasting at ABI Research. “Layer on ‘smartphone-envy’ and you have a recipe for high handset volumes.”
This rebound is having some interesting consequences:
1) Component manufacturers have never had it so good. Nokia in particular reported a hardware crunch, especially with displays (e.g. AMOLED) and semiconductor components for low-cost handsets. Nokia’s leading market-share in this segment has increased Nokia’s exposure to the component crunch.
2) Vendors that have strong portfolios in smartphones (RIM, Apple, HTC and Motorola) have seen their growth in market-share outperform the market. This effect is likely to continue into 4Q-2010 and 2011.
3) Unless Nokia can resolve its component resourcing challenges, it is likely to be supply-constrained again in 4Q-2010, a quarter that typically equates to 30% of annual handset sales. “Nokia’s market-share could well come under further pressure,” adds Kevin Burden, VP and practice director for mobile devices.
4) Handset vendors with greater in-house ability to source their own components (e.g. Samsung and LG) will be able to take advantage of the market opportunity to expand volumes.
5) Typically a handset boom period is followed by a market softening as customers wait for the next “must have” handset feature innovation to make its way to the market. We should not be unduly worried. There is still considerable room for innovation in the smartphone sector, not just “feature innovation” but also “cost reduction innovation,” which should keep customers keen.
The spotlight has to be put on Apple and RIM: they increased their market-shares to 4.1% and 4% respectively. While Samsung did manage to demonstrate quarterly growth (to 20.6%), other vendors contracted: Nokia (31.9%), LG (8.2%), Sony-Ericsson (3%), Motorola (2.6%).
From a volume point of view, ABI reported that total shipments of mobile handsets are expected to be 1.34 billion by YE-2010 and should maintain their momentum all the way to 2015, which will see more than 1.7 billion in handset shipments.
“The Asia-Pacific region currently makes the largest contribution to global handset sales,” says ABI Research industry analyst Celia Bo. “Handset sales are projected to increase 9% this year compared to 2009, and will account for 38% of total shipments. China is clearly a major source of handset demand, but it is not the only one. India and Indonesia are also expanding their domestic demand.”
The Indian handset market is expected to grow from 84.3 million handsets in 2009 to 104 million in 2010, a Year-over-Year growth of 24%. Similarly, Indonesia is not insignificant. Many of its 240 million people confidently purchased 33 million handsets in 2009 and that figure is expected to surpass 37 million by the end of 2010. Both markets have traditionally been fertile ground for Nokia distributors and dealers. In those markets, the Finnish manufacturer has enjoyed a market-share well above its global average.
Nokia has been very effective in producing ultra-low cost handsets that are robust and user-friendly and at the right price-point. However, Nokia has seen its market-share steadily eroded in the mid- to high tiers as India’s and Indonesia’s aspiring middle classes purchase high-end feature phones and smartphones. Vendors such as Samsung, LG and RIM have been net beneficiaries.
“A number of local handset vendors such as Micromax and Spice Mobile in India, and Nexian and SPC Mobile in Indonesia, are intent on catering to low-end and mid-tier end-users,” notes VP and practice director Kevin Burden. “Their game-plan is to push the envelope on providing increasingly feature-rich handsets at aggressive price-points.”
This rebound is having some interesting consequences:
1) Component manufacturers have never had it so good. Nokia in particular reported a hardware crunch, especially with displays (e.g. AMOLED) and semiconductor components for low-cost handsets. Nokia’s leading market-share in this segment has increased Nokia’s exposure to the component crunch.
2) Vendors that have strong portfolios in smartphones (RIM, Apple, HTC and Motorola) have seen their growth in market-share outperform the market. This effect is likely to continue into 4Q-2010 and 2011.
3) Unless Nokia can resolve its component resourcing challenges, it is likely to be supply-constrained again in 4Q-2010, a quarter that typically equates to 30% of annual handset sales. “Nokia’s market-share could well come under further pressure,” adds Kevin Burden, VP and practice director for mobile devices.
4) Handset vendors with greater in-house ability to source their own components (e.g. Samsung and LG) will be able to take advantage of the market opportunity to expand volumes.
5) Typically a handset boom period is followed by a market softening as customers wait for the next “must have” handset feature innovation to make its way to the market. We should not be unduly worried. There is still considerable room for innovation in the smartphone sector, not just “feature innovation” but also “cost reduction innovation,” which should keep customers keen.
The spotlight has to be put on Apple and RIM: they increased their market-shares to 4.1% and 4% respectively. While Samsung did manage to demonstrate quarterly growth (to 20.6%), other vendors contracted: Nokia (31.9%), LG (8.2%), Sony-Ericsson (3%), Motorola (2.6%).
From a volume point of view, ABI reported that total shipments of mobile handsets are expected to be 1.34 billion by YE-2010 and should maintain their momentum all the way to 2015, which will see more than 1.7 billion in handset shipments.
“The Asia-Pacific region currently makes the largest contribution to global handset sales,” says ABI Research industry analyst Celia Bo. “Handset sales are projected to increase 9% this year compared to 2009, and will account for 38% of total shipments. China is clearly a major source of handset demand, but it is not the only one. India and Indonesia are also expanding their domestic demand.”
The Indian handset market is expected to grow from 84.3 million handsets in 2009 to 104 million in 2010, a Year-over-Year growth of 24%. Similarly, Indonesia is not insignificant. Many of its 240 million people confidently purchased 33 million handsets in 2009 and that figure is expected to surpass 37 million by the end of 2010. Both markets have traditionally been fertile ground for Nokia distributors and dealers. In those markets, the Finnish manufacturer has enjoyed a market-share well above its global average.
Nokia has been very effective in producing ultra-low cost handsets that are robust and user-friendly and at the right price-point. However, Nokia has seen its market-share steadily eroded in the mid- to high tiers as India’s and Indonesia’s aspiring middle classes purchase high-end feature phones and smartphones. Vendors such as Samsung, LG and RIM have been net beneficiaries.
“A number of local handset vendors such as Micromax and Spice Mobile in India, and Nexian and SPC Mobile in Indonesia, are intent on catering to low-end and mid-tier end-users,” notes VP and practice director Kevin Burden. “Their game-plan is to push the envelope on providing increasingly feature-rich handsets at aggressive price-points.”