11/26/2008 1:09:00 PM
The changing mobile market
Apple and BlackBerry are stronger than ever, Motorola has disappeared and 3’s Facebook phone has popped up out of nowhere.
Strong and willing
Apple and BlackBerry have already started to eat into the market share of the established manufacturers, and both brands are well armed for the Christmas battle. Overall handset sales are falling, but smartphone shipments have almost doubled year-on-year.
Apple has secured more than 6% of the UK market just with its iPhone device, and the BlackBerry manufacturer, RIM, has taken a total market share of around 4%. BlackBerry shipments to the UK grew by 105% year-on-year in the third quarter, and growth is likely to continue in the final quarter of the year.
The iPhone and the BlackBerry Storm are expected to increase the market shares for their manufacturers during the Christmas period. Francesco Jeronimo, research manager at analyst firm IDC, says: ‘We expect a higher increase in sales for BlackBerry and believe they will get a very good position in the fourth quarter with the Storm and Bold.’
The full impact of the iPhone’s move to prepay has still not happened. Another analyst says: ‘We are expecting that two or three weeks before Christmas the hype will kick in and it will become the must-have gadget. There will definitely be an uplift on prepay iPhones.’
Apple fans already have their iPhones so will not be adding to the device’s incremental sales, but the prepay version will appeal to a wider audience, ensuring it is a coveted Christmas gift, the analyst adds.
There have also been rumours that claim the price of the prepay iPhone will fall before Christmas, although these reports have not been confirmed.
BlackBerry has teamed up with Vodafone in an exclusive deal for the Storm. The fact that the Storm is a hit became obvious when the handsets were flying off the shelves the weekend it was released. Both Vodafone and BlackBerry have invested significant funds to promote the device.
‘BlackBerry is still perceived as a business tool but the Storm is changing that with the touch-screen and its association with a young person like Lewis Hamilton. The key for them will be continued advertising, applications beyond the phone and demonstrating the capabilities to customers,’ the analyst says.
A surprise entrant to the market has been INQ (the recently created subsidiary of 3’s parent company Hutchison Whampoa), which will bring out its first handset in time for the Christmas market. Priced at £80 on prepay, the device that lends its focus to Facebook and social networking could be a hit this Christmas, following in the footsteps of 3’s Skypephone, which managed to take an estimated 5% of the market in 2007.
Kevin Russell, 3’s CEO, says the new device will appeal to consumers that want a smartphone but are not willing to pay the high price tag.
Pulling out of the race
Motorola’s disappearance from the market has been one noticeable change since 2007. During last year’s run-up to Christmas, the US manufacturer was still a credible player, with more than an 8% share of the market, which has now fallen to just above 3%. Motorola’s market share has been taken up mainly by Samsung, with devices like the Tocco and the G600.
Motorola has not attempted to join the Christmas race with big launches, although it has released a couple of new handsets this year, including the ZN5. The manufacturer’s comeback strategy will start next year, with the unveiling of five high-end handsets, and they will have a limited distribution at Carphone Warehouse and O2. Motorola’s current position could not be further from the days when Carphone sold 400,000 of its pink RAZR devices in the run-up to Christmas 2005.
The biggest battle of the Christmas market will be between Nokia and Samsung, especially in prepay, where the two are tied in terms of market share. Nokia has maintained its top position in total handset shipments to the UK but, while its main challenger last year was Sony Ericsson, Samsung has already overtaken the Finnish giant in prepay, giving it the biggest share of the market.
All is not lost for Sony Ericsson, as its C905 and X1 Xperia handsets have brought renewed excitement for the manufacturer’s products.
The analyst says: ‘Sony Ericsson has some great products but Nokia and Samsung have been aggressive and Sony has been slow to react. Also, they haven’t got many high-end handsets. The Xperia is great, but it needs more exposure; there haven’t been many ads for it.’
Nokia has prepared for battle on all fronts: high-end, prepay and services. A spokeswoman for the manufacturer says: ‘Nokia Comes With Music is key for us this Christmas, with the Nokia 5310
and Nokia N95 8GB available with this service. The Nokia N96 is also proving to be very popular.’
In prepay, Nokia is banking on its 6500 Classic and, at the cheaper end, its 2630 and 2610 devices.
Samsung is betting on megapixels, having launched the eight-megapixel Pixon M8800 and i8510 phones. Samsung’s U600 and J700 devices are also still topping the prepay sales charts. The lower end handsets are likely to continue as the big sellers during the financially-overcast Christmas.
The analyst says: ‘Nokia and Samsung still have about 50% of the prepay market and it’s been mainly the under £30 handsets that have driven volume for the manufacturers. For Nokia, the popular handsets have been the 2630 and the 6300 and for Samsung it’s been the J700 and E250.’
There may be trouble ahead
The economic downturn has hit the manufacturers hard and the industry is hoping the Christmas period will boost sales. The third quarter financial results for all the manufacturers show a fall in sales compared with last year and total handset shipments to the UK were down 9.6%, according to IDC.
The manufacturers have seen profits tumble, especially in the third quarter just ahead of the Christmas period. Nokia’s profits were down by 30% and Samsung’s by 15% year-on-year. Sony Ericsson made a £20m loss and Motorola suffered a £518m loss. Only LG, where sales increased by around a third, managed to impress during this gloomy economic climate.
Nokia also warned that its sales for the Christmas period would be lower than originally forecast. The company said in a statement: ‘As a result of the rapid change in global consumer spending, which has impacted on the mobile device market, Nokia now expects that the industry mobile device volumes will be lower in Q4 2008 than previously expected.’
A downturn in profits is not the only significant change the manufacturers have seen. So far, three of the five major handset manufacturers have seen their UK chiefs jump ship. Jim Michel was the first to announce his resignation from Motorola in November, followed by Nokia’s Simon Ainslie and Sony Ericsson’s John Harber, who are to leave their posts in the following two weeks.
One of the themes this Christmas is the exclusive deals handset manufacturers have made with operators. O2’s exclusivity with Apple has continued for over one year, with no end in sight for the near future. BlackBerry has offered one of its biggest products, the Storm, to Vodafone exclusively, and T-Mobile is the only network selling the G1 Google phone. HTC’s main product for Christmas, the HTC Touch HD, is only available at Orange.
The rise of the laptop
The biggest winners of the Christmas market might not be handset manufacturers, but laptop manufacturers. Sales of laptops are at an all-time high, fuelled by the ever-increasing demand for mobile broadband. According to analys