Electronics Production | February 13, 2007
Western European mobile handset<br>shipments to slow down in 2007
According to IDC's latest Western European Mobile Phone Tracker, the final quarter of 2006 saw total mobile phone shipments, including traditional mobile phones and converged devices, of 57.8 million units.
This represents year-on-year growth of 6% and means that the total market in 2006 stood at just over 185 million units, with healthy year-on-year growth of 9%. "The final quarter of 2006 saw the mobile phone market maintain steady growth, though year-on-year volume increases in the fourth quarter failed to match those seen earlier in the year, which supports IDC's predictions of a slowdown in 2007. In particular, the traditional mobile phone segment grew by just 4% in 4Q06 as challenging market conditions inhibited growth despite seasonal impetus," said Jean Philippe Bouchard, senior research analyst, European Mobile Devices. While the top 4 vendors all registered positive growth, price reductions were a tactical necessity for most vendors to ensure that volumes met expectations in the final quarter by offsetting factors inhibitive to growth such as lengthening postpay contract terms, mounting saturation of subscriber growth, and portfolio rationalization by operators. "The fourth quarter of 2006 showed again that it is becoming increasingly difficult to build market share without price reductions and expansion into lower-margin mid and low-end segments," said Andrew Brown, program manager, European Mobile Devices and Computing. "Sony Ericsson is a widely envied exception given that the vendor is building share without adversely impacting margins, largely due to a clearly differentiated and communicated proposition-led high-end portfolio that resonates in the minds of operators and consumers. The challenge in 2007 is to retain such margins as its low end portfolio expands." However, while the traditional mobile phone market is becoming increasingly polarized - the top 4 vendors representing 86% of the market in 4Q06 with growth showing visible signs of a slowdown - the converged device segment saw buoyant growth of 29% in the final quarter to total 4.7 million units and 13.9 million units in the full year 2006. "Beyond seasonal impacts on demand, central to converged device market performance in the final quarter was the market's emergence from the transitional period that characterized much of 2006, with key vendors such as Sony Ericsson, HTC, HP, and Palm all adding breadth and depth to their portfolios. Furthermore, with products such as the BlackBerry Pearl and HTC S310 fulfilling demand for sub-€300 devices, the converged device market expanded its segment coverage to claim over 8% of the total mobile phone market," said Geoff Blaber, senior research analyst, European Mobile Devices.
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