Nokia's Still On Top, But Motorola's Losing Its Grip

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MUMBAI: Troubled mobile-handset maker Motorola saw a sharp decline in sales to 29.9 million units in the first quarter of 2008, compared with 47.6 million units in the year-ago period. Having lost its global number two position in the handset market to Samsung, it is now under threat from LG, global technology research firm Gartner said on Wednesday.

US-based Motorola, whose market share slipped from 18.4% to 10.2% during the period, continues to struggle in finding a successor to its popular Moto Razr. Although it introduced new models, its portfolio is not competitive enough.

“Motorola is unlikely to introduce many products in the second half of 2008, a time when most competitors will bring new additions to the market, so it stands little chance of winning back its No 2 position. It may even have to watch out for a threat from current No 4 player LG,” said Carolina Milanesi, research director for mobile devices at Gartner.

Indian consumer electronics major Videocon had expressed interest in buying Motorola’s handset business, valued at around $3.8 billion. In March, Motorola decided to spin off the handset division amid declining revenues.

During the first quarter, Samsung sales reached 42.4 million units, with a market share of 14.4% as it widened the gap with third-placed Motorola. Samsung is reacting quickly to the focus on touch-screen devices. “Samsung’s choice to be a quick follower has paid off so far, but it needs to focus on diversifying its designs and strengthening its lower-end portfolio to increase sales in emerging markets,” said Ms Milanesi.

Market leader Nokia sold 115.2 million mobile phones in the first quarter of 2008, with a market share of 39.1%. Nokia was able to maintain market leadership, thanks to the richness of its portfolio, which appeals to users in both emerging and mature markets, said Gartner. Worldwide sales of mobile phones grew 13.6% to 294.3 units during the first quarter of 2008, boosted by rising demand in the Asia Pacific region, led by India.

The report said 114.4 million mobile devices were sold in the Asia Pacific region. This represented a 26.6% increase over the first quarter of 2007. “India remained a high-growth market, and South Korea became a high-growth market as well during the quarter,” the report said.

as consumers upgraded their handsets before the new extended contracts are put in place by operators in the second quarter of 2008,” the report said.

“Growth in Asia Pacific was driven by a high number of new subscribers, lower-priced phones based on wideband code division multiple access (WCDMA) technology, as well as low-cost global system for mobile communications (GSM) phones and ultra-low-cost CDMA devices,” said Anshul Gupta, principal research analyst for mobile terminals at Gartner, based in Mumbai.

“We remain confident that 2008 will be a growth year for the mobile phone industry. Sales, driven in particular by emerging markets, will continue to rise in the range of 10-15%. However, the value of the market will be lower than we stated in our forecast update published in December 2007. This is because the current economic slowdown and higher fuel costs will force consumers to defer phone purchases in mature markets, while higher food prices will lead to longer replacement cycles in emerging ones,” Ms Milanesi said.

[@ksh@T 20]

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