European Mobile Phone Market Grows 9% in 3Q06

According to IDC's latest European Mobile Devices Tracker, the Western European mobile phone market, consisting of traditional mobile phones and converged devices, grew by 9% year on year in 3Q06, with shipments reaching 44.1 million units compared to 40.5 million units in the corresponding period of 2005.

"The third quarter of 2006 saw the Western European mobile phone market continue to exhibit healthy growth year on year as further intensification of competition in the high-end feature-phone segment, driven by the proliferation of media and specifically imaging-oriented handsets in highly innovative form factors, maintained healthy renewal cycles in combination with strong prepay traction at the low end," said Jean Philippe Bouchard, senior research analyst, European Mobile Devices.

However, IDC also emphasizes that in contrast to the previous quarter, the converged device segment showed far healthier growth of 30% year on year as key vendors such as Sony Ericsson completed portfolio transitioning and launched new products to the market ahead of the high-volume final quarter.

"While converged devices demonstrated lower growth than anticipated in the first half of 2006 in Western Europe, due to vendor portfolio transitioning, key product delays, and strong competition from competitively positioned feature phones, third-quarter performance partly confirmed expectations of a strong 2H06 both in business and consumer segments as converged devices grew to represent 8% of the total mobile phone market," said Andrew Brown, program manager, European Mobile Devices.

Consequently, IDC anticipates healthy final-quarter growth for both converged devices and traditional mobile phone segments, resulting in expected full year 2006 growth of 11% year on year.

"IDC expects competition in the high end of the Western European mobile phone market to continue to intensify during the final quarter and into 2007 due to the volume of products attempting to embrace convergence and execute on the challenge of communicating the proposition to the end user," said Geoff Blaber, senior research analyst, European Mobile Devices. "However, while competition and a proliferation of multimedia-centric products will drive healthy renewal cycles and total market growth, IDC predicts that vendors will increasingly resort to highly aggressive pricing strategies to appeal to operators by reducing the requirement for subsidization, therefore impacting overall profit margins."

Vendor Highlights

Nokia - Growth of 9% year on year for Nokia ensured that the Finnish vendor retained a commanding market share of 35% despite significant competition from Samsung and Sony Ericsson in mid and high-end segments. Expansion of the vendor's low-end portfolio and the launch of further midrange devices under the Express Music brand should bolster its performance outside its high-end portfolio in the final quarter.

Samsung - Solid year-on-year growth for Samsung meant the Korean vendor reestablished second position from Motorola as portfolio transitioning for the U.S. vendor and positive market acceptance of Samsung's new Ultra range alongside the E900 secured a market share of 17%. In addition, healthy first-quarter shipments of the i320 increased converged device shipments.

Motorola - Motorola saw flat growth year on year and a decline in market share to 14% as the vendor transitioned its portfolio ahead of the launch of new devices such as the HSDPA v3xx and Maxx scheduled for the final quarter and, most importantly, the KRZR K1, which represents the anticipated replacement for the RAZR aimed at the mass market.

Sony Ericsson - A very strong showing for Sony Ericsson, due largely to its extensive Walkman line and the K800, meant the vendor challenged Motorola for third position, shipping under 10,000 units less than Motorola despite the lack of an extensive entry-level portfolio. 3Q06 also saw Sony Ericsson begin to rebuild its converged device presence following the launch of the M600, and with the long-awaited P990 and W950 launching in the final quarter, IDC expects a substantial sell in for 4Q06 and into 2007, particularly given the consumer orientation of the W950.

BenQ Siemens - In the quarter that BenQ filed for insolvency of the BenQ Siemens European operation, shipments declined further year on year, with market share falling to just 6%. Ultimately, the strategy used to reassert BenQ Siemens was too big a challenge in marketing a high-end product portfolio that used a Siemens brand synonymous with well-manufactured, predominantly low-end handsets, in combination with an Asian brand that held limited brand equity worldwide."

Posted to the site on 24th November 2006