Trouble in Mobile Phone-Land?

Well, yes and no, depending on which vendor you talk to.  On Friday, Sony-Ericsson said that it expects to ship 42% fewer handsets in the first quarter of 2009 than it sold in the previous quarter, an announcement which does not augur well for the mobile industry.  Overall global mobile handset sales declined in the fourth quarter of 2008, and 2009 is shaping up to be a challenging year for handset manufacturers as consumers retrench and retailers and distributors reduce inventories.  But is all doom and gloom?

Apple, in its OS 3.0 preview event last week, claimed more than 800 millions downloads (at about a dollar a pop) over the past eight months from its iPhone App store.  Apple also exceeded its 2008 forecast for iPhones by 3.7 million units.  Apple is still a tiny player compared to the more established vendors such as Nokia and Sony-Ericsson.  Yet even LG and Samsung both increased their respective market shares in 2008.  And overall, the mobile handset market did see growth in 2008…just not to the same extent as in previous years.

The timing of the broken global economy has coincided with two mobile market dynamics: a shift towards more sophisticated broadband-enabled products that support innovative applications in mature markets, and demand for lower-cost commodity handsets in emerging markets.  India is now the fastest growing mobile phone market in the world…adding 11 million new mobile subscribers in January alone out of a total population of 1.2 billion.  Mobile handset sales are also relatively strong in China, Indonesia, and Brazil.  Apple and RIM seem to have cracked the code with buyers at the high end, even in a down economy.  Nokia seems to be doing well in some emerging markets.  We’ll be watching the upcoming data from Q1-09 very closely to see just how closely anecdotal information lines up with cold, hard market statistics.