Mobile handset winners and losers of 2008

In 1H 08, mobile handset shipments happily chugged along at ~14 percent year-on-year. In 2H 08, Q3 handset shipments slowed to 8 percent before crashing into the red in Q4 with -10 percent. The underlying root cause?

"Sheer fear sapped the confidence of consumers, enterprises and corporate users across the board," said Jake Saunders, Asia-Pacific VP of ABI Research. "As a result, 2008 signed out the year with 1.21 billion handsets shipped for an annual growth of 5.4 percent. Just a year ago, we had +16 percent."

The winners
The largest gainer in market share was Samsung with an increase of 2.7 percent (2008: 16.2 percent). Samsung had faultless four quarters, driven by handsets such as the Omnia and Ultra series.

The next significant gainer was Nokia with 1.8 percent (38.6 percent). Most of those gains, however, were secured in the 1H 08. Market share started to slide in the 2H and Q4 in particular as emerging market growth stalled.

LG secured a 1.5 percent increase for an 8.3 percent share, in particular gaining significant traction in the North American market.

"While those three manufacturers dominate the global market, it probably would not come as a surprise to many that RIM (Blackberry) and Apple (iPhone) boldly moved up in the market share stakes with growths of 0.9 percent and 0.8 percent, respectively," noted Kevin Burden, practice director for mobile devices. Despite the tough economic climate, these two players are likely to continue their march to the consumer center stage but it in a way that does not drop their handset average selling prices (ASPs) to bargain basement levels.

HTC was late entering the consumer smart phone market with the Android-based G1, but the vendor has significant contracts in place (such as T-Mobile), which should play to its advantage in 2009.

Enter the year of smart phones
The vendor with the most significant loss in market share was Motorola with -5.1 percent in 2008 (8.3 percent). This is an improvement on 2007 during which the firm suffered a -7.8 percent drop, but it underscores the urgency for Sanjay Jha and Motorola's senior management to deliver robust selling products in 2009. It will be a tough year for Motorola, but it needs to deliver handsets that draw back the once faithful Motorola purchaser before it is truly too late. The challenge is that purchasers in 2009 will be very, very picky.

Sony-Ericsson also stumbled in the mid-part of 2008 with a -0.7 percent contraction in market share. The release of Experia 1X in Q4 and related smart phone products could help the vendor improve market share in 2009.

"Sharp revisions to country-by-country economic conditions in the space of just three months will likely mean that a year-on-year handset shipment contraction of between -5 percent and -10 percent is becoming a distinct possibility," Saunders concluded. "What is certain is that handset vendors will be trying to convince everyone they should own a smart phone. Welcome to the Year of Smart phone."