Worldwide mobile device sales to fall in 2009: Gartner

According to a recent research report from Gartner, sale of worldwide mobile handsets is likely to fall by less than 1% in the year 2009 . The report says that stronger than expected sales in western Europe and an acceleration in the gray market in the third quarter of this year will drive worldwide mobile devices sales to end users to 1.21 bn, a 0.67% decline from year 2008.

In September, Gartner had forecast sales to decline 3.7% in 2009. Gartner now predicts sales in 2010 will show a 9% increase from 2009. Though the economic recession had a significant impact on the mobile industry globally, but for India it was not a bad show. Despite the downturn, India witnessed a phenomenal increase in its mobile subscriber base and reached a total of 355.26 mn in October 2009, maintaining its record of adding around 10 mn subscribers every month.
According to an IDC report , sale of mobile handsets in India grew 6.7%, from 94.6 mn to 101 mn units in twelve months ending June 2009. Thanks to attractive offers introduced by operators and a complete portfolio of handsets ranging from high-end to cheap mobiles at affordable prices offered by handset makers.

According to IDC, there are around twenty-six emerging handset players in India, contributing 6.3% shipments during the twelve-month period ended June 2009. During the twelve month period ending June 2008, there were only eleven emerging vendors contributing 1.2% of overall shipments. Apart from these new handset vendors, the India market is also witnessing entry of a number of greenfield operators competing with the established players by offering attractive, cheap and lucrative call rates and other offers for attracting more and more subscribers.

While the year 2008-09 saw high end phones like Apple iPhone 3G, Blackberry storm being introduced for the urban consumers, it was also a year when leading handset makers like Nokia, Samsung, LG, etc, as well as new vendors like Micromax, Fly, Karbonn introduced cheap and affordable mobile phones especially for the rural segment. So, the years saw growth from both the rural as well as urban segments.
Carolin Milanesi, research director, Gartner says, “Although the gray market or 'white label' is not a new phenomenon and has been generated by Chinese device manufacturers who do not have a license to sell and manufacture devices without a valid international mobile equipment identity (IMEI), today gray market sales are no longer limited to China. All manufacturers will have to compete with gray market players as they expand into emerging markets in Asia Pacific, Eastern Europe, the Middle East and Latin America and bring a lower weighted average selling price (ASP). The gray market will affect Nokia's market share the most.”

In 2009, overall market economic conditions impacted disposable income and extended replacement cycles in mature markets from twelve to eighteen months. Gartner expects replacement cycles globally to return to normal within two years, with the introduction of more aggressively priced smartphones and shorter contracts. Gartner also expects second hand sales in emerging markets and SIM-only sales globally to stabilize in 2010 and to start decreasing from 2011 as consumers feel less macroeconomic pressure.

Smartphone volumes will represent 14% of total mobile devices sales in 2009, growing by 23.6% from 2008 and to 38% by 2013. However, this positive outlook could be negatively impacted by mobile operators' decision to associate all smartphones with high flat-rate data plans, which could increase the total cost of ownership beyond mass market consumer acceptance. Despite this, Gartner expects global ASPs for enhanced phones and smartphones to decline by 3% in 2010.

The strong performance of markets such as western Europe and Asia Pacific was balanced by weaker than expected sales in Latin America and the Middle East and Africa. Looking and evaluating the current scenario, the year 2010 seems to be very promising and challenging for Indian as well as the global handset market.