Mixed results from mobile manufacturers

According to the recent round of results from the world's largest mobile phone handset manufacturers, Nokia's share of the world market has risen to 40 per cent, while Motorola's has fallen to 12 per cent

The results saw broad grins of delight at Nokia, smiles of modest contentment at Samsung and Sony Ericsson, but deep frowns of displeasure at Motorola. Nokia, Finland's largest company and the world's largest handset manufacturer, now enjoys an impressive 40 per cent of the world market.

Nokia announced on 24 January that it had sold a bumper 133.5 million units in the fourth quarter, up 20 per cent sequentially (quarter on quarter) and up 27 per cent on the same period last year. "Nokia is firing well on all cylinders," said Martin Garner, mobile director at analysts Ovum.

In contrast, Motorola, the US giant, lost market share. Motorola sold 40.9 million handsets in the fourth quarter. This was up 10 per cent sequentially, but down a depressing 38 per cent on the same period last year. "Motorola had a catastrophic first half of 2007, when it lost 45 per cent of its market share in just six months," said Garner. "Motorola faces a grim 2008," he added.

After its extraordinary success with RAZR, Motorola failed to build a successful portfolio of products. This led to lack of success in opportunities such as 3G and China. And now demand for existing products such as KRZR and RAZR2 has slackened. Motorola is working on a new portfolio of products and recently signed a contract with Qualcomm for 3G chipsets, but the first products are only likely to be sold in late 2008.

Motorola's poorly performing handset division has dragged down the results of the whole company, more than offsetting improving performance in other parts. The recent results can only add to speculation that the division could be sold off. However, a buyer may be difficult to find. Another possibility would be a joint venture, with Apple and Cisco tipped as possible partners.

Earlier in the month, Korean manufacturer Samsung reported positive fourth quarter results, showing good sales in handsets. "2008 looks set to be a key year in Samsung's attempt to pull away from Motorola and Sony Ericsson," said Garner. Its handsets division performed well, shipping 46.3 million devices in the quarter, a 41 per cent increase over the year, though pricing came under pressure.

Sony Ericsson sold 30.8 million handsets in for the quarter, a rise of 18 per cent over the year. For the full year Sony Ericsson beat 100 million shipments for the first time, posting 103.4 million. Incoming President, Hideki Komiyama, said Sony Ericsson had gained per cent market share in 2007.

Will Motorola's weakness give Sony Ericsson the chance to increase sales in the US? "Given the economic climate and weakening retail sales data coming out of the US, we think that 2008 is not going to be a great year for a big push into the US. Unless Sony Ericsson is gambling on Motorola getting worse and taking share from it - a highly risky strategy," said Garner. "Sony Ericsson did say that it is putting a lot of effort into re-building its position in Asia. We think that it would be prudent to give that very high short-term priority."

Image: Getting it right - Nokia's comprehensive range of handsets has given the Finnish firm a strong base for future growth

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