Global mobile market grows fast at 16.5% in Q2; Nokia still no. 1: Gartner

ZTE, Apple and HTC emerged as the big gainers in the second quarter mobile phone numbers released by Gartner today, while Nokia, Samsung, LG, RIM and Sony Ericsson continued to lose market share.

Overall, nearly 428.7 million phones were sold in the quarter ended June, up 16.5%. Though much slower than last year’s 31% growth, Gartner said the second quarter number was higher than what it predicts for the full year (a 12% growth).

Interestingly, even as other surveys have knocked off Nokia from the top smart-phone vendor position, Gartner said Nokia did indeed lead both smart phone and overall phone sales, even if things are likely to change in the current quarter.

Nokia continued to hold on to the top slot with a total market share of 22.8%, according to Gartner. However, that was down from 30.3% for the same quarter a year.

Indeed, according to Gartner, a desperate push to clear stocks, accompanied by discounts and price-cuts, helped Nokia emerge as the biggest smartphone vendor in the second quarter. These numbers are calculated on the basis of number of phones, rather than their value.

“The channel bought less and worked hard to reduce stock levels, partly by cutting prices on older products. These factors reduced Nokia’s average selling price for smartphones, compared to the first quarter of 2011.

“The sales efforts of the channel, combined with Nokia’s greater concentration in retail and distributors’ sales, saw Nokia destock more than 9 million units overall and 5 million smartphones, helping it hold on to its position as the leading smartphone manufacturer by volume,” Gartner said.

However, this performance may be a one-time blip as sales from Nokia to its distribution networks was nowhere near as impressive.

“In smartphones, Nokia’s sales into the channel in the second quarter of 2011 were low. This was partly due to a very competitive market that deflated demand for Symbian, but also to inventory management issues in Europe and China in particular,” Gartner said.

Among the big gainers were Apple, which moved from 2.4% of the market (counted in terms of number phones, not total value of phones) a year ago to 4.6%.

Apple, the iPhone maker, was at number four, after Samsung and LG. Samsung was still a strong number two with 16.3% market share, though that was down from 17.8% a year ago.

Samsung had to pay a small price for focusing on high-end phones which helps its revenues and profits, but makes it look smaller in terms of the sheer number of devices sold. On the other hand, Nokia sells many more mid-range and low-end phones, which helps the company remain at the top in terms of sheer numbers.

“The Galaxy S II sold well, and this model went on to chalk up 5 million sales by the end of July. A strong performance in the smartphone market helped Samsung increase its market share, to become the third-largest smartphone vendor.

“However, its overall share dropped year-on-year, and grew only marginally quarter-on-quarter, mainly due to Samsung’s weaker presence in more price-sensitive market segments,” Gartner said.

Overall, nearly 428.7 million phones were sold in the quarter ended June, up 16.5%. This will slow down going forward and the full year growth figure will only be around 12%, Gartner said.

Smartphones increased their share of the total mobile phone market from 17% a year ago to 25%. That leads us to estimate that in terms of revenues and profits, they would account for closer to two-thirds of the market.

“Smartphone sales continued to rise at the expense of feature phones,” said Roberta Cozza, principal research analyst at Gartner.

“Consumers in mature markets are choosing entry-level and midrange Android smartphones over feature phones, partly due to carriers’ and manufacturers’ promotions.”

However, replacement sales in Western Europe showed signs of fatigue as smartphone sales declined quarter-on-quarter, Gartner added.

Despite the increase in overall sales of phones during the quarter, the movement of phones from the manufacturers to the distributors and stores was sluggish, at around 421 million units, Gartner said. This was due to higher stocks built up during the first quarter by worried distributors after the Japanese earthquake.

As a result, the ‘sell in’ to the distribution network was lower by 4% in the June quarter compared to the March quarter, Gartner said.

“We expect manufacturers and distributors to remain cautious about raising their stock levels in the second half of 2011, following the recent uncertainty on the world financial markets,” said Annette Zimmermann, principal research analyst at Gartner.

Apple continued to exceed expectations, Gartner said.

“Part of its growth came from the 42 new carriers and 15 new countries that it entered in the second quarter of 2011, which brought its total coverage to 100 countries.

“This expansion caused its inventory to grow a little by the end of the second quarter of 2011, when sales to end users stood at 19.6 million units. In mainland China, Apple is the seventh-largest mobile phone vendor and the third-largest smartphone vendor.

It was another bad quarter for the Blackberry-maker Research In Motion (RIM), which saw its smartphone market decline to 12 percent from 19 percent a year ago. It also lost its No. 5 position in the worldwide ranking of mobile device vendors to ZTE.

“Demand for RIM’s devices in the second quarter was impaired by an ageing portfolio and delays in shipping products. In the coming quarters RIM will have to deal with increased competition to its messaging offering and manage a platform migration from BlackBerry 7 to QNX,” Gartner said.

In terms of operating system, Android continued its relentless march ahead. It went from being on just 17.2% of the smartphones sold in the same quarter last year to 43.4% this year.

Gartner’s estimate is lower than the 48% figure given out by Canalys, which had also given the top smartphone vendor slot to Apple, followed by Samsung and then by Nokia. Gartner’s smartphone ranking is Nokia, Apple and then Samsung.

“Google and Apple are the obvious winners in the smartphone ecosystem. The combined share of iOS and Android in the smartphone operating system (OS) market doubled to nearly 62 percent in the second quarter of 2011, up from just over 31 percent in the corresponding period of 2010,” Gartner said.

That, however, is still lower than the combined market share of 67% ascribed to Android and iOS by Canalys.

“Gartner analysts observed that these two OSs have the usability that consumers enjoy, the apps that consumers feel they need, and increasingly a portfolio of services delivered by the platform owner as well,” Gartner added.


Apple displaces Nokia as top smart-phone maker: Canalys