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© Nokia Electronics Production | November 02, 2011

Analysis: Vendors either reinvent or leave feature phones

Vendors are either jettisoning feature phones or re-inventing them for emerging markets, ABI Research reports.
“Q3-2011 smartphone shipments grew 33% year-on-year to reach 28.8% shipment penetration of total handsets (381 m) shipped. Lackluster smartphone shipments from Apple, RIM and Nokia have temporarily halted the hyper growth of the smartphone market in Q3”, said Mike Morgan, Senior Analyst at ABI Research.  

Nokia achieved a remarkable turn-around through tactical pricing cuts that bounced its market share back up to 28.0% from 24.6% in Q2 2011. Yes, it cleared out Nokia’s excess inventory and distribution channels, but it also resulted in its average selling price slumping to US$ 51 from US$ 65. While Nokia is pre-installing apps, such as Angry Birds, to its re-invented feature phones, both Sony-Ericsson and LG are moving their focus away from feature phones.

Sony-Ericsson stated its plans to end feature phone production in 2012 while LG seeks to dominate the LTE smartphone market. Motorola grew both handset and smartphone shipments in Q3 while tablet sales slumped to 100K. ZTE’s Q3 handset shipments are set to bump LG from 3rd place when officially announced on Monday. Samsung’s legal issues with Apple were not sufficient to slow its shipment growth, and it remains comfortably in second place with 20.8% market share.

Ericsson’s dramatic, if not entirely unanticipated announcement to sell its 50% share in the Sony-Ericsson joint venture for US$1.5 billion underscores the seismic paradigm shifts in the mobile device market-place. Sony wishes to integrate smartphones more tightly into its portfolio of tablets, laptops and gaming platforms.

“Customers are no longer seeing their handset as a ‘standalone device.' Increasingly, customers are seeking out a seamless communications, media and UI experience”, said Jake Saunders, VP for Forecasting.
 

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