Handset Sales on the Rise, Smartphones Soar
Fri May 2, 2:09 PM ET
Jay Wrolstad , Wireless.NewsFactor.com
Handset manufacturers apparently have weathered the global economic storm, enjoying healthy sales during the first quarter of 2003, according to a report from IDC. Sales of converged voice and data devices were particularly strong as consumers appear ready to embrace the next generation of wireless communications hardware.
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According to IDC, global handset shipments grew by 16.6 percent compared with the year-ago period, reaching 107.6 million units. Sales of converged, or "smartphone," devices, a relatively new category, were up a whopping 438 percent over the first quarter of 2002, totaling 1.7 million units.</font>
Compelling New Features
The addition of color screens, digital cameras and a plethora of new applications and functions are driving the market. "Virtually all of the major handset manufacturers introduced new models during the quarter, and consumers are being drawn to upgrade their phones," IDC research analyst Ross Sealfon, a report author, told NewsFactor.
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Nokia maintained its position as top dog in overall global handset sales during the quarter, selling some 38 million devices and holding a 35.5 percent market share, more than double that of second-place Motorola (15.5 percent) and well above Samsung (12.3 percent) and Siemens, which rank third and fourth, respectively. LG Electronics replaced Sony Ericsson in the top five.
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Sony Ericsson Rises
In the converged device space, Nokia has a 57 percent market share, head and shoulders above second place Sony Ericsson (11 percent) and third-place Motorola (7.4 percent). According to Sealfon, the rapid expansion in this market can be attributed to new, more attractive form factors, better operating systems and increased functionality.
Particularly noteworthy, the analyst said, is that Sony Ericsson vaulted into second place in the most recent quarter after not appearing on the converged device list a year ago.
During the quarter, a number of new Palm OS, Pocket PC Phone Edition, Windows-powered Smartphone, and Symbian OS-based converged handheld devices were introduced to the market, IDC reports, joining a list of new products now shipping. These offerings are expected to push market expansion through this year and beyond.
Nokia in the Vanguard
"Nokia is leading the charge. Their share is so significant that what they do drives the market," said Sealfon. He cited the introduction during the past three months of the N-Gage mobile gaming device, the 3300 music device and 6800 messaging device as evidence that the company continues to break new ground in the industry.
The company has done a good job of anticipating and delivering what consumers want in a variety of hardware packages, Nokia spokesperson Keith Nowak told NewsFactor. "There has been a lot of interest in new phones with color screens and with imaging capabilities," he said, noting the company's sales were up 13 percent from the year-ago quarter.
Nowak compared the introduction of such new features and the addition of data-enabled devices to the evolution from analog to digital technology in the wireless industry. "This is a recent development, and people now want to move from voice-centric to voice and data devices," he said.
Strong Year Ahead?
Significant growth in the converged-device market was expected, Nowak said, since there were few such products available a year ago. "Nokia has made an effort to add the features consumers want, such as games, imaging and media players ... while not complicating things by offering too much in each device," he observed.
IDC analysts were somewhat surprised by the first-quarter sales figures. "The biggest story is that the manufacturers rolled out a lot of devices that were very compelling," Sealfon said, "which is an indication of a strong year ahead."
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Estimated IDCC Royalty due from Nokia and Samsung
1Q2003
PER
HANDSET NOKIA SAMSUNG COMBINED
ROYALTY (38M) (13M) (51M)
$0.50 $ 19.0M $ 6.6M $25.5M
$0.75 28.5M 9.8M 38.3M
$1.00 38.0M 13.0M 51.0M
Combined Nokia/Samsung (48% combined market share)
WORST CASE - $26M (quarter), $104M (annualized)*
BEST CASE - $51M (quarter), $204M (annualized)*
*No seasonality factor
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