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Mobile Phone Growth Slides In Fourth Quarter

Mobile Phone Growth Slides In Fourth Quarter
February 3, 2012 3:59PM

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Though industry analysts expect Nokia to sell fewer Symbian devices this year -- even as it ramps up production of Lumia smartphones based on Microsoft's Windows Phone platform -- the company's broad distribution around the world and manufacturing capabilities remain key advantages.

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Mobile phone shipments on a global basis reached 427.4 million units in the fourth quarter of 2011 -- a tepid 6.1 percent rise from the year earlier period, IDC says.

The global handset market's single-digit growth in the seasonally strong fourth quarter shows that handset vendors are not immune to weaker macroeconomic conditions worldwide, the firm's analysts said Thursday.

A surge in smartphone purchases led by Apple's iPhone 4S in the final three months of 2011 also caused feature phone shipments to decline faster than analysts had expected. Smartphone growth in Western Europe was not enough to offset the feature phones decline, despite successful product performances from Apple and Samsung.

With the exception of Apple, feature phones still account for a majority of unit sales at four of the five top handset vendors, said IDC Research Analyst Kevin Restivo.

"The introduction of high-growth products such as the iPhone 4S, which shipped in the fourth quarter, bolstered smartphone growth," Restivo said. "Yet overall market growth fell to its lowest point since the third quarter of 2009 -- when the global economic recession was in full bloom."

Strong iPhone Customer Loyalty

Unit shipments of Apple's red-hot iPhone 4S reached a record 37 million units in the fourth quarter of 2011, which propelled the company into the No. 3 slot in the global handset market overall. During last year as a whole, Apple shipped 93.2 million iPhones.

According to Strategy Analytics, Apple is on track to ship well more than 100 million iPhones during 2012.

"China is becoming a key market for Apple this year, and we expect Apple's share to grow rapidly in 2012, despite countless copycat rivals," said Strategy Analytics Director Tom Kang.

Investment firm Piper Jaffray expects Apple to ship 134 million iPhone units during calendar year 2012.

"Despite the lack of a fresh form-factor, the iPhone 4S launch sales are evidence of strong iPhone customer loyalty," said Piper Jaffray analysts Gene Munster and Andrew Murphy. The firm's data suggests that "iPhone re-buy rates could be as high as 94 percent, setting up a monster iPhone 5 upgrade, which we expect in August."

Samsung To Challenge Nokia

Global handset shipments on a full-year basis rose 11.1 percent during 2011, and IDC expects continued double-digit growth this year and beyond, with smartphones capturing a greater share of the overall market. Still, last year's unit shipment growth was significantly less than in 2010's 18.7 percent year-over-year rise.

During 2011, Nokia once again led the field by shipping 417.1 million handsets, which was good enough for a 27 percent market share, according to IDC. During the fourth quarter, however, Strategy Analytics said, Nokia's global handset shipments declined 8 percent.

"Volumes were buoyed by the sales of Nokia's low-end dual-SIM models in emerging markets like Southeast Asia, but were a little soft overall, as initial shipments of Microsoft Lumia phones could not offset declining Symbian sales," said Strategy Analytics Executive Director Neil Mawston.

Though industry analysts expect Nokia to sell fewer Symbian devices this year -- even as it ramps up production of Lumia smartphones based on Microsoft's Windows Phone platform -- the company's broad distribution around the world and manufacturing capabilities remain key advantages.

Still, Nokia's market leadership will be challenged in the year ahead by Samsung Electronics, which shipped 97.6 million handsets in the fourth quarter of 2011 and 329.4 million units in the year overall. The key to Samsung prospects for overtaking Nokia will be Samsung's ability to significantly grow its smartphone and feature phone volumes, IDC analysts said.

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