Worldwide mobile communication device sales to end users totaled 427.8 million units in the first quarter of 2011, an increase of 19 percent from the first quarter of 2010, according to Gartner, Inc. Smartphones continued to outpace the rest of the market, and a newly competitive mid-tier smartphone market will drive smartphones into mass adoption and accelerate this trend.
“Smartphones accounted for 23.6 percent of overall sales in the first quarter of 2011, an increase of 85 percent year-on-year,” said Roberta Cozza, principal research analyst at Gartner. “This share could have been even higher, but manufacturers announced a number of high-profile devices during the first quarter of 2011 that would not ship until the second quarter of 2011. We believe some consumers delayed their purchases to wait for these models.”
Overall, the earthquake and tsunami in Japan will have a smaller effect on the mobile communication devices market than initially anticipated. There is currently about six to seven weeks worth of inventory of finished products in the channel and about four weeks worth of inventory for components. Gartner estimates that manufacturers’ sales into the channel will drop in the second quarter of 2011, while sales through to consumers will be flat.
Nokia sold 107.6 million mobile devices in the first quarter of 2011. Its market share declined 5.5 percentage points year-on-year, and its share has reached its lowest since 1997. Nokia will aggressively lower average selling prices (ASPs) in markets where communications service providers (CSPs) control the sales channels, in order to maintain shipments of Symbian devices while waiting for its first Windows Phone 7 devices to reach the market. However, Nokia will face challenges from Android competitors and from some Japan-induced supply constraints.
In the first quarter of 2011, RIM announced that it would transition its BlackBerry portfolio to the QNX platform in 2012. This should make its smartphones more competitive in graphics, performance and touch, and unify RIM’s tablet and smartphone user experience.
Windows Phone saw only modest sales that reached 1.6 million units in the first quarter of 2011, as devices launched at the end of 2010 failed to grow in consumer preference and CSPs continued to focus on Android. In the long term, Nokia’s support will accelerate Windows Phone’s momentum.
Gartner analysts said that the shift toward an ecosystem focus, application and services is the critical success factor for device manufacturers. “Every time a user downloads a native app to their smartphone or puts their data into a platform’s cloud service, they are committing to a particular ecosystem and reducing the chances of switching to a new platform. This is a clear advantage for the current stronger ecosystem owners Apple and Google,” said Ms. Cozza. “As well as putting their devices in the context of a broader ecosystem, manufacturers must start to see their smartphones as part of a computing continuum.”
“The 13.3 million-unit growth in channel inventory, along with some softness in demand from users in emerging markets registered at the start of the second quarter of 2011, is leading us to be cautious about sales in the reminder of the year,” said Ms. Milanesi. “We are currently revising down our 2011 sales estimate as a result of these trends, and expect it will likely drop to between 1.790 billion and 1.795 billion units.”