Mobile Phones Falter In Fourth Quarter

According to a new report by research firm Gartner, mobile phone sales to end users totaled 314.7 million in the fourth quarter, a sign that "manufacturers continued to struggle against low consumer confidence in both emerging and mature markets."

Even the top mobile phone makers were not immune, Gartner said, noting that Nokia, LG, Sony Ericsson and Motorola all suffered declining sales in the fourth quarter.

For the full year, however, mobile phone sales to end users surpassed 1.22 billion for 2008, a 6 percent increase over 2007.

"Mobile phones have traditionally been one of consumers' preferred presents for Christmas," said Gartner mobile devices research director Carolina Milanesi in a statement. "However, in the fourth quarter of 2008 consumers were concerned about taking on the contract associated with the most attractive products on the market. Consequently, mobile devices in both emerging and developed markets experienced the lowest quarter-on-quarter growth ever recorded in a fourth quarter."

Meanwhile, mobile phone sales into the channel hit 297.3 million in the fourth quarter, marking the biggest difference between sales to the channel and sales to users that Gartner has measured since 2001. According to Gartner, the difference was the result of the channel reducing the inventory it holds. Low consumer confidence is forcing distributors and retailers to limit the volume they hold in stock because the channel cannot afford significant capital investment, Gartner said.

"Efforts to reduce inventory will intensify in the first quarter of 2009 and continue into the second quarter of 2009," Milanesi added. "In the second half of 2009, the channel will have to start restocking and this will help sell-in volumes. This will not mark the start of a market recovery--we do not expect demand to stabilize before 2010."

And while worldwide mobile phone sales slipped, North America had a record quarter to end 2008, with 49.1 million sales to users, roughly comparable to the fourth quarter of 2007 when just fewer than 49 million devices were sold. According to Gartner, increased use in smartphones over traditional mobile phones is fueling the North American market.

"Smartphones continued to be a driving force for consumers to upgrade their devices," Gartner principal analyst for mobile terminals research Hughes De La Vergne said in a statement. "Introductions of new products such as the RIM BlackBerry Storm and T-Mobile G1 helped smartphone sales grow to account for roughly 20 percent of total sales in the region."

Gartner's findings indicate that Nokia continues to lead the mobile phone market with a 37.7 percent market share in the fourth quarter, selling 118.8 million devices, a significant drop from the 133.2 million it sold in the fourth quarter of 2007. Samsung placed second, with 18.3 percent of the market in the fourth quarter, selling 57.5 million mobile phones. LG sold 28.1 million to capture 8.9 percent of the market; Sony Ericsson nabbed 7.5 percent market share selling 23.6 million mobile phones; and Motorola held 6.9 percent of the market, selling 21.7 million devices.