Mobile phone sales are falling, says Gartner

The analyst house has highlighted a two-percent year-on-year drop in quarterly sales of handsets, although it says smartphone sales are continuing to shoot up
Written by David Meyer, Contributor

Retail sales of mobile phones have dropped for the first time in almost two years, according to Gartner.

The analyst house said on Wednesday that sales for the first quarter of 2012 totalled 419.1 million units, down two percent year-on-year. It said it was likely to have to adjust its forecasts for the whole of 2012 down by around 20 million units.

Samsung Galaxy S III

Mobile phone sales are falling but smartphones, such as the Samsung Galaxy S III (pictured), are doing well, Gartner has said. Image credit: Ben Woods/ZDNet UK

"Global sales of mobile devices declined more than expected due to a slowdown in demand from the Asia/Pacific region," principal research analyst Anshul Gupta said in a statement. "The first quarter, traditionally the strongest quarter for Asia — which is driven by Chinese New Year, saw a lack of new product launches from leading manufacturers, and users delayed upgrades in the hope of better smartphone deals arriving later in the year."

Gartner's figures confirmed recent suggestions that Samsung is now the top handset vendor in the world.

The Korean manufacturer overtook Nokia during the quarter, selling 86.6 million handsets to the Finnish company's 83.2 million, according to the analyst firm. In the 12 months to the end of March, Samsung's market share rose from 16.1 percent to 20.7 percent, and Nokia's fell from 25.1 percent to 19.8 percent.

Apple is in third place with a 7.9-percent market share — up from 3.9 percent a year ago — and sales of 33.1 million handsets during the most recent quarter.

Smartphones continue to be the star performers in the mobile market, with sales up 44.7 percent year-on-year, according to Gartner's figures. It noted that Android-based phones accounted for 56.1 percent of all smartphone sales during the quarter. This is a slightly higher share than the 50.1 percent suggested by Kantar WorldPanel in a report released on Tuesday.

"Samsung took back the world's number one smartphone position from Apple, selling 38 million smartphones worldwide," Gartner said. "In addition, Samsung's Android-based smartphone sales in the first quarter of 2012 represented more than 40 percent of Android-based smartphone sales worldwide; no other vendors achieved more than a 10-percent share of the market."

Less successful

Nokia's sales for the quarter were down 22.7 percent year-on-year. Gupta pointed out that this again came down to smartphones — around 44 percent of Samsung's sales were smartphones, while the devices accounted for just 16 percent of Nokia's sales.

Smartphone sales are becoming of paramount importance at a worldwide level.
– Anshul Gupta, Gartner

"Smartphone sales are becoming of paramount importance at a worldwide level," Gupta said.

Nokia's difficulty in the smartphone market is largely down to its switch from the ageing Symbian OS to Windows Phone. As the company's recent results have shown, the uptake of Nokia's Windows Phones is not nearly enough to compensate for the dramatic fall-off in Symbian sales.

Research In Motion (RIM) is also seeing its share shrivel. In the first quarter of 2011, it sold 13 million BlackBerry smartphones and had a three-percent share of the global handset market. A year on, it sold 9.9 million devices for a 2.3-percent share.

"RIM desperately needs to deliver winning BB10 [BlackBerry 10] products to retain users and stay competitive," Gupta said. "This will be very challenging, because BB10 lacks strong developer support, and a new BB10 device will only be available in the fourth quarter of 2012."

While Android is rapidly taking sales and market share from its older rivals, Gupta suggested that Android manufacturers are struggling to differentiate their products.

He said high-end Android devices such as those sold by Samsung could be differentiated by applications and services, which in turn depend on "intellectual property assets". However, companies making lower-end devices can only make their products stand out on the basis of price.

"This will only worsen with the entry of new players and the dominance of Chinese manufacturers, leading to increased competition, low profitability and scattered market share," Gupta added.

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