Nokia maintains top spot in mobile phone market

Motorola fell behind Samsung in the mobile phone market according to second quarter results published Thursday by IDC and Strategy Analytics.

Nokia held onto its dominant share of the global mobile phone market during the second quarter as Motorola tumbled from second to third place despite brisk sales in emerging markets, according to reports released Thursday.

Overall, mobile phone vendors shipped 272.7 million units during the second quarter, an increase of 16.5 percent over the same quarter last year, according to a report from IDC. The figures include smartphones but not personal digital assistants (PDAs).

However, sales were slow in industrialized nations, where there are few first-time buyers since most customers are simply replacing their existing phones. That was a factor in keeping shipment growth below its rate for the same quarter last year, when it rose by 22 percent year over year.

Despite the challenges, vendors like Samsung Electronics Co. and Sony Ericsson Mobile Communications grew far faster than the market average, posting increases in unit shipments of 48.4 percent and 58.6 percent, respectively.

That success allowed Samsung to move past Motorola into second place in the vendor rankings. Following Nokia's 37 percent market share, Samsung had 13.7 percent, Motorola had 13 percent, followed by Sony Ericsson with 9.1 percent and LG Electronics with 7 percent, according to IDC.

Another analyst firm, Strategy Analytics, published similar findings on Thursday, also noting that Motorola dropped behind Samsung in the rankings. Strategy Analytics had slightly different figures, saying the market grew at 11 percent to reach 258 million units in the second quarter.

Both firms agreed that Motorola was the only major vendor to ship fewer phones in the second quarter than it did for that period last year, dropping to 35.5 million units from 51.9 million units.

Although Motorola shipped its 100 millionth Razr phone during the period, its sales will continue to get worse before they rebound, IDC said. The company needs time to record benefits from a corporate restructuring plan that includes a new management team, refreshed products, reduction in inventory and job cuts, said IDC analyst Ramon Llamas.

The company is suffering today from its strategy of cutting prices to win market share. In the short run, that helped it gain high visibility with the popular Razr, but excess inventory has allowed competitors to swoop in and gain share, Llamas said.

In contrast, Nokia's strength came from the same strategy it has used in recent quarters, with strong results in Europe and Asia, and rising demand for its N series and E series phones.

The changes at Motorola have already affected the industry, but in the long term, Apple will create greater change with iPhone, launched on June 29, IDC research director Shiv Bakhshi said in the report. Although Apple did not register among the top phones based on units shipped, its competitors have already begun to improve designs and user interfaces.

Apple could even give device vendors greater sway with the mobile operators that have traditionally controlled the industry, since the marketing hype attending the iPhone launch has helped force consumers to think of mobile phones more as fashion items than utilitarian tools, Bakhshi said.

Likewise, the Strategy Analytics report said that the iPhone launch gave a boost to the entire industry, although Apple's sales of 0.3 million units gave it a market share of just 0.1 percent.

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Ben Ames

IDG News Service

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