Worldwide phone market down in 2009: Study

By Jordan Crook

July 31, 2009

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The worldwide phone market has caught the same economic cold as most industries, as IDC's Worldwide Quarterly Mobile Phone Tracker expects a 13 percent decline in its market outlook for 2009.

The phone market has seen another quarter of year-over-year decline in the second quarter of 2009. However, mobile device manufacturers can still see a shining star in the midst of this year's financial madness and mayhem: the smartphone.

"The key finding here is that even in a downturn economy, people still want to talk on phones," said Ramon Llamas, senior research analyst with IDC's Mobile Devices Technology and Trends team, Missoin Viejo, CA. "People are really turned on to what smartphones can do beyond making phone calls."

In the second quarter of 2009, handset vendors shipped a total of 269.6 million units globally, a number down 10.8 percent from the 302.2 million units sold in the same quarter in 2008.

Even still, 2009's second quarter results are an improvement from the first quarter's 17.2 percent decrease.

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IDC credits the volatile economic climate with this drop in worldwide mobile phone sales.

The Interactive Data Corp. claims that the vendors who were able to adjust quickly to the economic downturn were able to send out greater volumes of shipments, which invariably cut costs for consumers, especially on high-end devices.

Currently, the smartphone arena is best-suited to be an area of improvement, as many of the big handset vendors such as Nokia, Samsung, Research in Motion and Apple all outperformed what was expected of their respective smartphones in the second quarter of this year.

"Even in this down economy, consumers are willing pay top dollar for these devices," Mr. Llamas said. "They pay like $150 a month outside of taxes and actually buying the phone."

The high demand for smartphones is now generating a price war between large wireless carriers and handset vendors, according to ICD.

Apple was one of the first vendors to make a huge price cut, when it slashed the cost of its iPhone 3G down to $99, a trend ICD expects to continue.

This trend is hoped to maintain the competitive pricing necessary for mature markets.

Regionally, North America is hanging on with the arrival of the competing Palm Pre and iPhone 3G S.

Vendors competing with the Palm Pre and iPhone also benefited from the buzz surrounding the two smartphones, as well as the competitive pricing, lending to larger shipment volumes.

Interest in pre-paid phones for the budget-weary consumer remained high in the area and the market for mid-tier and high-end devices began to show some improvement with the introduction of new devices from top vendors.

"What this means for mobile marketers, specifically, is that they can put anything on mobile," Mr. Llamas said. "The challenge is how do you sell something tactile through mobile?"