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26 January 2007


Record shipments in Q4 propel mobile phones past 1 billion units in 2006, says IDC

The worldwide mobile phone market reached more than 1 billion units shipped in 2006, according to IDC's Worldwide Quarterly Mobile Phone Tracker. This concurs with the figure just released by Strategy Analytics, which that firm had forecast through most of the year.

IDC says that vendors shipped 1.019 billion units, 22.5% up on 2005’s 832.8 million. For the fourth quarter, shipments totaled a record 294.9 million units, 19.7% up on Q4/2005’s 246.4 million.

"Emerging markets contributed to the high volume sales," said Ramon Llamas, research analyst in IDC's Mobile Technology and Tracking team. "It was not long ago that shipments into mature markets, including Japan, North America, and Western Europe, consumed the majority of devices shipped worldwide. More recently, however, device shipments into emerging economies in Asia/Pacific, Central and Eastern Europe, the Middle East, Africa, and Latin America have surpassed shipments to mature markets, and the difference between the two continues to grow,” he adds.

"IDC expects this trend to continue as mature markets reach saturation and emerging markets, with much lower tele-density, provide ample opportunity for handset vendors to attract first-time users,” he continues. “In addition, the time to set up a mobile network is much shorter and less expensive than the time to set up a landline network, propelling cell phone shipments further. Finally, mobile phones are seen as both a practical necessity and a status symbol in many emerging markets. Together, these economic, technological, and social conditions will continue to drive strong demand for mobile handsets in emerging markets for some time to come," concludes Llamas.

From a vendor perspective, Q4/2006 was similar to that of Q3, where some of the top-tier phone vendors reported record shipments yet declining profit margins:

1. Nokia shipped 105.5 million units (up 26% year-on-year, from 34% to 35.8% market share) - a record of more than a million units on average each day. However, due to massive volumes of entry-level devices, it experienced downward pressure on its profits compared to a year ago. At the other end of the product spectrum, its converged mobile devices continued to outpace all other vendors, shipping 11.1 million units.

2. Motorola shipped a record 65.7million units (up 47%, from 18.1% to 22.3% share). However, operating profit of 4.4% fell short of its target. The firm acknowledged challenges in its product portfolio mix and late introduction of 3G devices. To combat this, it plans to tighten control over expenses and cut 3500 jobs, as well as launching more 3G devices.

3. Samsung shipped 32 million units (up 17.6%, but down from 11% to 10.9% share). The firm exceeded its sales target for full-year 2006. The launch of its Ultra Edition handsets buoyed shipments in Europe and Asia, and its Blackjack bolstered its converged mobile device lineup in Q4. Samsung solidified its position as the number three vendor, but fell further behind second-place Motorola. The firm expects to ship 133 million units in 2007.

4. Sony Ericsson shipped 26 million units (up 61.5%, from 6.5% to 8.8% share). This followed a strong campaign to close the gap to Samsung and pull further ahead of LG Electronics. Success of Sony Ericsson’s entry-level devices, including the J200, J300, and Z300, have brought more depth to its portfolio, extending its reach to more customers, particularly in emerging markets. Of the leading vendors, Sony Ericsson had the largest year-on-year change, both for Q4 and full-year 2006.

5. LG Electronics shipped a record 17 million units (up 4.9%, but down from 6.6% to 5.8% share). Profits did not keep up due to price cuts on some of its leading models. Profits for 2006 fell 72.9% from 2005. The firm hence plans to take an aggressive approach to anticipate market demand, including introducing more key devices, expanding its presence in emerging markets, and enhancing its position and brand in mature markets.

Other vendors combined shipped 58.5 million units in Q4/2006 (down 16.8%, from 23.7% to 16.5% market share), showing the consolidation of the market on the big five suppliers.

See related item:

Handset shipments reached forecast of 1 billion units in 2006, says Strategy Analytics