Mobile phone shipments drop 11 percent in Q2, IDC says

Stiff competition and strong demand for smartphones led to lower prices for consumers

The worldwide mobile phone market remained weak in the second quarter despite some encouraging signs in smartphone shipments, market researcher IDC said Thursday.

Mobile phone shipments fell 10.8 percent year-on-year in the second quarter to 269.6 million units, IDC said, noting the figure was an improvement over the first quarter. IDC revised down its first quarter handset shipment figure to a 17.2 percent year-on-year decline, from a 15.8 percent drop in its previous report.

"The challenges from the previous nine months - aggressive channel destocking, foreign exchange volatility, and uncertain demand - continued to plague the mobile phone market, but were not as severe as before," says Ramon Llamas, senior research analyst at IDC, in a statement. Small signs of improvement centered around increased demand for high-end handsets, such as smartphones.

IDC predicts the global handset market will decline 13 percent in 2009 compared to last year.

The mobile handset market has been tough on companies but good for consumers, who benefitted with lower-costs, including on high-end devices such as smartphones, IDC said. Stiff competition and hot demand has caused a price war for smartphones.

"Apple's price cut on the iPhone 3G reflects a trend we expect to continue in upcoming quarters," IDC said.

Nokia remained the top mobile phone vendor in the world in the second quarter with shipments of 103.2 million handsets, down 15.4 percent year-on-year, according to IDC. Samsung Electronics took second place among the global top five after mobile phone shipments rose 14.2 percent in the second quarter to 52.3 million units, while shipments at third place LG Electronics rose 6 percent to 29.8 million. Motorola's shipments fell 47 percent year-on-year to 14.8 million units, good for fourth place globally.

In fifth place, Sony Ericsson was the only company among the top-five to fail to increase handset shipments in the second quarter over the first quarter. The company shipped 13.8 million mobile phones in the second quarter, down 43.4 percent year-on-year and lower than the 14.5 million handsets it shipped in the first quarter.