Cellphone sales may drop 4 per cent in 2009

Tarmo Virki,  Reuters

HELSINKI — Cellphone sales are set to fall up to 4 per cent in 2009 from this year as the economic slowdown hurts consumer demand across the world, research company Gartner said on Tuesday.

The world's top cellphone makers Nokia Oyj and Samsung Electronics have said the market could fall next year.

Handset makers had remained relatively unscathed by the global economic crisis this year, but successive warnings from Nokia, Qualcomm Inc. and Intel Corp. signalled a rapid deterioration of consumer electronics demand.

Gartner said sales of mobile handsets in the largest region of Asia Pacific, which includes the two biggest growth markets, China and India, rose 13.8 per cent in the third quarter to 116.7 million phones, but warned growth would come to a halt.

“We expect the global economic decline and associated drop in disposable incomes to make sales in the region almost flat during the fourth quarter of 2008,” analyst Anshul Gupta said in a statement.

Gartner said the slowdown in developed markets in the region, coupled with delayed replacement purchases in emerging markets, will hurt growth there.

Shares in Nokia were 1.2 per cent lower at €10.69 by 0939 GMT, dragging the DJ Stoxx technology index into the red.

Third-quarter handset sales in Western Europe – the key market for sales of more expensive and more profitable smartphones – fell 8 per cent from a year ago to 43.5 million phones.

Analyst Carolina Milanesi said in Western Europe, home market for Nokia and Sony Ericsson, all vendors in total will sell 20 million phones less in 2008 than a year ago.

Handset vendors sold 308.5 million mobile phones globally in July-September, with demand in emerging markets lifting sales 6 per cent from a year earlier, Gartner said.

Handset sales volumes in emerging markets surpassed developed markets in 2005.

Nokia's market share rose to 38.2 per cent in the quarter from 37.8 per cent the previous year, the research company said.

South Korea's Samsung had 17.1 per cent of the total market in the quarter, while Sony Ericsson took the No. 3 spot with 8.1 per cent.

“Its definitely not due to (Sony Ericsson's) merit. Keeping third position will be difficult,” Ms. Milanesi said.

Struggling Motorola saw its market share fall to 8 per cent from 13 per cent, and Garter said there are more troubles ahead for the U.S. vendor.

“I doubt that in 12 months we will be speaking about them. There's only one way for them, and that's downward,” Ms. Milanesi said.

LG Electronics almost caught Motorola, seeing its market share rise to 7.8 per cent. Apple rose to seventh spot, helped by success of its 3G iPhone, and tracking closely Blackberry-maker RIM.

Learning from the 2001 slowdown, the only time market growth has stalled before, cellphone vendors have this year avoided building up large inventories.

“There's no big issue with inventories,” Ms. Milanesi said, adding that among the largest vendors only Motorola and Sony Ericsson had built up some inventory in the quarter.