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Motorola Nudged Out Of Second Place |
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Written by Adam Gosling
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Sunday, 05 August 2007 |
Motorola struggles to find its way with phone shipments falling in real terms while the worldwide market and all its competitors continue to prosper.
IDC's Quarterly Mobile Phone Tracker monitors the shipments of regular mobile
phones - all voice centric devices rather than handsets that incorporate pen
or keypad data features (smartphones), which are tracked in a different
category.
According to the latest worldwide results for the second calendar Quarter of 2007, Motorola failed to
capitalise on a good (but not quite as good as last
year) shipment growth. This allowed rival Korean manufacturer,
Samsung, to steal a march on the American company forcing Motorola out
of second place.
Meanwhile,
king of the hill, Nokia, continued to set a healthy pace picking up
whatever Motorola market share Samsung failed to steal. Nokia is the undisputed leader of both this category and the converged device (smartphone) category puttingit well ahead of the competition. In this category, for example, Nokia sold as
many phones as the next three vendors combined during the second quarter. Much of its growth was attributed to shipment in
Europe and Asia, but IDC says Nokia is also performing well in the United States.
In contrast, it couldn't really have been a
worse result for Motorola which saw its unit shipments fall from 51.9 million
to 35.5 million over the equivalent quarter in 2006.
The
Quarterly Tracker counted a
total of 272.7 million units worldwide in Q2 '07, that was up about
6.9% on the first quarter and 16.5% more than the same quarter a year
ago, so Motorola's failure to capitalise on the market strength is a
sad indictment on its management and strategy.
According to IDC slower growth
for the overall market this year can be attributed to the high market penetration rate in more mature regions,
which limits growth primarily to replacements. Much of the growth in unit
volumes derives from emerging markets where new subscribers are the main source of shipments.
This
amply demonstrates the effect of Motorola's emphasis on driving margin
at the expense of volume which it embarked on after criticism that it
was too quick to reduce the pricing on the enormously popular RAZR
model in the pursuit of volume. Perhaps the pendulum has swung to far
the other way?
IDC says Motorola was the only vendor to post a year-on-year decrease among the
leading vendors, and by the end of the second quarter, the company slipped to
third place, citing ongoing shipment challenges in Asia, the Middle East,
Africa, and to lesser extent, Europe. Motorola is seeking to reverse its
fortunes by installing a new management team, refreshing its product
portfolio, lowering inventory and reducing its workforce, but expects to face
more challenges before recovering. On the positive side, the company crossed a
milestone having shipped its 100 millionth RAZR phone.
The researcher notes that this is the first time in four years
there has been a change in the market share rankings among the market
leaders and came as a result of a second slow quarter for Motorola in
the face of four straight quarter of record shipments for Samsung which
shipped 37.4 million units.
"Following multiple quarters of increased growth, Samsung was able to benefit
from Motorola's recent stumble," says Ryan Reith, research analyst with IDC's
Worldwide Mobile Phone Tracker. "Samsung's Ultra Edition line of handsets has
allowed the company to provide a wide range of handset selections for the
upper-tier of the market while maintaining characteristic design. This
platform approach has been beneficial for Samsung and the vendor plans to
further expand on this business practice," Reith adds.
Meanwhile
Sony Ericsson stood solid in fourth position but took honors for having
the largest year-over-year shipment increase among the leading vendors.
The Walkman range accounted for a third of shipments with two new
Walkman handsets (W960 and the W910) expected later this year
potentially further improving its position.
LG
Electronics fifth place closed it lag behind Sony Ericsson only
slightly. LG Electronics' reported an increase in operating margin
going from virtually breaking even a year ago to more than 10% thanks
to devices like the Chocolate and then V.
"While the shift in the industry vendor rankings is certainly of importance,
perhaps, the big story of the quarter was Apple's debut as a mobile phone
vendor with its launch of the iPhone," says Shiv K. Bakhshi, Ph.D., director
of worldwide mobile device research at IDC. "Even though limited in the number
of units shipped, the iPhone is likely to have a disproportionately large
impact on the industry," says Bakhshi. "For one, it has pushed the envelope on
industrial design and user interfaces for all vendors. For another, it could
forever alter the structural relationship between device vendors and mobile
operators who have traditionally controlled the mobile environment, especially
in the US.
"Equally important, the unparalleled hype surrounding the iPhone
could lift mobile devices out of a utilitarian frame of reference and place
them squarely in the fashion frame of reference, potentially raising ASPs for
the entire industry. For the present, however, it seems at least to have
raised the profile for all converged mobile devices," Bakhshi.
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Vendor
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Unit Shipments
Q2 2007
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Market Share
Q2 2007
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Unit Shipments
Q2 2006
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Market Share
Q2 2006
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Year-Over-Year
Delta
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Nokia
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100.8
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37.0%
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78.4
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33.4%
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28.6%
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Samsung
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37.4
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13.7%
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25.2
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10.7%
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48.4%
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Motorola
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35.5
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13.0%
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51.9
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22.1%
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-31.6%
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Sony Ericsson
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24.9
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9.1%
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15.7
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6.7%
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58.6%
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LG Electronics
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19.1
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7.0%
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15.0
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6.4%
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27.3%
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Others
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55
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20.2%
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48.5
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20.7%
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13.4%
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Total
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272.7
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100.0%
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234.7
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100.0%
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16.2%
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Source: IDC Worldwide Quarterly
Mobile Phone Tracker, August 2, 2007. Note: Vendor shipments are branded
shipments and exclude OEM sales for all vendors.
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