Global mobile phone shipments slow in Q3 as financial crisis bites

The worldwide mobile phone industry felt the impact of the global financial crisis in the third quarter of 2008 as total handset shipments slowed down significantly over previous quarters, a report from the International Data Corp. (IDC) revealed.

Mobile phone manufacturers shipped a total of 299 million handsets in the third quarter, up 3.2 percent from the same period last year but down 0.4 percent quarter on quarter.

IDC said the third quarter of the year has historically been a ramp-up quarter as manufacturers load their sales channels with handsets in preparation for the holiday season, producing year-over-year growth rates as high as 20 percent as a result.

However, this year has not witnessed a similar ramp up, largely due to the current economic situation.

“Handset vendors felt the pressures of the dismal economy in the third quarter of 2008, and as a result, shipments and revenues were down almost across the board,” according to Ryan Reith, senior research analyst with IDC’s Quarterly Mobile Phone Tracker.

Reith noted, however, two signs of hope from two major players during the third quarter. First, as highly anticipated and now confirmed, Apple reported an extremely successful quarter and noted it is on pace to surpass its initial 2008 shipment estimates. Second, Nokia’s CEO Olli-Pekka Kallasvuo announced a positive outlook for 2008 despite a tough third quarter. “This offers reassurance to all industry players as Nokia has been a clear leader in the mobile phone space for quite some time,” he said.

Looking forward to the holiday season, mobile phone average selling prices have already begun to drop and marketing campaigns are ramping up, and competition for buyers will remain high as spending will be a concern to consumers. IDC expects tight economic conditions will make 2009 slower and more competitive as well.

“While the overall mobile phone market registered small growth compared to last year, the market for converged mobile devices (commonly known as smartphones) posted strong gains,” added Ramon Llamas, senior research analyst with IDC’s Mobile Devices Technology and Trends.

“The worldwide release of the Apple iPhone 3G earlier this summer marked a major step not only for Apple, but also raised the profile of converged mobile devices as a whole. Add on top of that the attention generated by the Google-powered G1, and the converged mobile device suddenly finds itself as the device sought by both seasoned and first-time users.”

The Asia/Pacific market registered mixed fortunes in the third quarter of 2008. Although there were signs of growth in emerging markets like China and Indonesia, other developed markets suffered during the quarter. In particular, the Australia market slumped due to a combination of third-quarter seasonality and weak economic sentiment, while the high-end Korea market experienced a double-digit decrease as dueling operators eased away from an expensive subsidy war.