Mobile makers tussle for top 5 spots

Nokia and Samsung's dominance in mobile handsets, globally and in Asia, not likely to change in near future but fierce competition to fill rest of top 5 slots, note observers.
Written by Liau Yun Qing, Contributor

Nokia and Samsung's dominance in the mobile phone market, both globally and within the Asia-Pacific region, is set to continue for at least another year, said analysts. However, the rest of the top 5 positions will be marked by volatility.

In the first quarter of 2011, the top 5 mobile handset manufacturers worldwide were Nokia, Samsung, LG Electronics, Apple and Research In Motion (RIM), according to separate reports from Gartner and Frost & Sullivan. ABI Research listed ZTE at No. 5, with RIM trailing close behind the Chinese manufacturer.

A year ago, the leading five phonemakers were Nokia, Samsung, LG, RIM and Sony Ericsson, noted Jake Saunders, ABI Research's vice president of forecasting.

The picture is slightly different in the Asia-Pacific region excluding Japan, where top performers for Q1 are Nokia, Samsung, ZTE, LG and Huawei, according to statistics from IDC.

Melissa Chau, research manager for client devices at IDC Asia-Pacific, told ZDNet Asia in phone interview that China's large market size has propelled the two Chinese vendors to the region's top 5. The world's most populated nation accounts for about 40 percent of Asia-Pacific mobile shipments, while India is second with a 30 percent market share.

ZTE and Huawei, Chau pointed out, are "doing reasonably well" in their home market because of its domestic 3G standard as well as Chinese operators promoting local brands and pushing cheap 3G handsets. Market leaders Nokia and Samsung are considered premium brands in China, she added.

Nokia, Samsung to continue reign
Asked on the vendor ranking for the next 12 months, Chau said she does not see Nokia or Samsung slipping off the charts in a year or even for "many years". However, she noted that if Apple releases a cheaper version of its iPhone, there might be a chance of the Cupertino company entering the top 5.

Gartner principal analyst Anshul Gupta, echoed a similar view for the global market. In an e-mail, he said Nokia and Samsung will continue their dominance in the year ahead as they have built up a huge lead over their competitors.

However, there may be changes with the rest of the top 5 players due to small differences in market share, noted Gupta.

RIM will likely be a victim of the shifting mobile market. In an e-mail interview, Serene Chan, industry analyst of Asia-Pacific ICT practice at Frost & Sullivan, said that among the top 5 players, the BlackBerry maker faces the biggest challenge retaining its position.

Competition, she noted, will come from global handset makers with Google Android phones, especially Sony Ericsson. Recent shipments of BlackBerry devices exceeded Sony Ericsson's handset shipments "by merely a thin margin", she pointed out. RIM shipped 13.2 million BlackBerry handsets in its financial quarter ended May while Sony Ericsson managed to ship 11 million phones in its second quarter ended June, she pointed out.

Saunders of ABI Research pointed to LG as a likely candidate to fall out of the top 5 race. The Korean electronics giant is losing market share and needs its Microsoft Windows Phone 7 strategy to pay off.

According to Saunders, the market will need to watch out for chart newcomers such as TCL, Huawei and HTC. He noted that while HTC is just a smartphone vendor, it is similar to Apple in terms of its strong product line-up and wide access to markets around the world with many operators carrying its phones.

Huawei and fellow Chinese phonemaker TCL, which both sell feature phones, will have the "inside track on volumes" as the handset market will still be largely driven by feature phones sold in emerging markets such as China, he said.

Past leaders still in contention
That said, the popularity of smartphones is set to cause a "huge shift" in market share, said IDC's Chau. In 2010, smartphones made up about 15 percent of handsets in the Asia-Pacific region, but by 2015 the share will jump to nearly 40 percent.

Frost & Sullivan's Chan observed that Nokia, together with former top vendors in feature phones such as Sony Ericsson and Motorola, are changing their strategy to target the more profitable smartphone segment but at the expense of losing market share in lower-end phones.

"Whilst these players are able to protect their market share in the premium segment through constant investment in research and development, they have been losing market share in the lower income range as the availability of Android-based phones have made smartphones more affordable, which further drive a rapid migration from feature phones to smartphones," added Chan.

That said, IDC's Chau noted that added that these handset vendors "have no choice" but to turn to the higher-end market because of cut-throat competition from low-cost, white-box or even "bandit" handsets.

Their efforts may pay off in the long run, she added. Low-cost players will find it hard to break into the smartphone segment as buyers who are paying more for a handset are more likely to pay for brand familiarity.

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