Global mobile devices sales to end users witnessed a robust growth of 16.5 per cent during the second quarter of 2011 (2Q-2011) despite the economic downturn. Latest report of the world’s leading IT research and advisory company, Gartner, shows that mobile devices sales totaled 428.7 million units in 2Q-2011 of which a major share of 35.8 per cent belongs to no-name companies. Latest quarterly numbers suggest that some hundreds of small mobile device manufacturers from developing countries, mainly China, are rapidly eating up the market share. Figures indicate that the top 10 mobile device manufacturers, including Nokia, Samsung, LG, Apple, ZTE, Research In Motion (RIM), HTC, Motorola, Huawei Device and Sony Ericsson, control only 64 per cent of the market as small mobile device manufacturers have almost doubled their market share since 2004. Data reveals that these small players sold 153 million units, including the very popular grey market devices in China. It underscores that the Shenzhen area alone pumps out around one billion phones per year, according to a China Daily article “One city, 1,000,000,000 phones!”
SMARTPHONE DEMAND
Research shows that the demand for feature-rich smartphones also witnesses a steep rise of 74 per cent year-on-year (YoY), which accounted for 25 per cent of overall mobile devices sales in 2Q-2011 and up from 17 percent in 2Q2010. Principal Research Analyst at Gartner Roberta Cozza says that consumers in mature markets were choosing entry-level and midrange Android smartphones over feature phones, partly due to carriers’ and manufacturers’ promotions. However, replacement sales in Western Europe showed signs of fatigue as smartphone sales declined quarter-on-quarter (QoQ). Data shows that in smartphones category, Nokia’s sales dropped during this period partly due to a very competitive market that deflated demand for Symbian, but also to inventory management issues in Europe and China in particular. On the other hand, Samsung witnessed strong performance in the smartphone market that helped it in becoming the third-largest smartphone vendor. However, its overall share dropped YoY and grew only marginally QoQ, mainly due to weaker presence in more price-sensitive market segments. Research shows that Apple continued to exceed expectations as 42 new carriers and 15 new countries started offering Apple devices in 2Q-2011, which brought its total coverage to 100 countries. This expansion helped Apple to sell 19.6 million units in 2Q-2011. In mainland China, Apple is the seventh-largest mobile phone and the third-largest smartphone vendor.
WHO ARE THESE COMPANIES?
Analysts believe that there are several tiers of these companies. At the bottom, there are thousands of family enterprises that produce some small number of phones. However, the exact number is uncertain as they often sell their products in gray markets, but they are in thousands and selling tens of millions of handsets every year. The next layer is composed of tiny manufacturers – mostly located in China and India – that sell on the order of 100,000 units a quarter. These are around 400 to 500 manufacturers that sell around 30 million phones a quarter, which is 10 million more than Apple does in the same time. Analysts believe that not every mobile device manufacturer outside the top 10 is a tiny factory in Shenzhen as some of the next tier manufacturers that fall in the top 40 rankings are promising. They point out that MicroMax, the top domestic Indian phone maker, is probably the leading candidate for “most promising phone manufacturer outside the OECD and China.”
OPERATING SYSTEM
Google and Apple emerge winners in the smartphone operating system (OS). The combined share of Apple’s iOS and Google’s Android in the smartphone OS market swelled to nearly 62 per cent in 2Q-2011, up from just over 31 per cent in the corresponding period of 2010. Gartner research analysts believe: “these two OSs have the usability that consumers enjoy, the apps that consumers feel they need, and increasingly a portfolio of services delivered by the platform owner as well.” Experts say that earlier no one really paid attention to small manufacturers located in developing countries such as China and India, but retails figures paint a different picture. Nokia is still the biggest-selling brand and Apple is a relatively small player in the global phone market but in this volatile market any number of today’s tiny companies could become tomorrow’s giants.
