Downturn hits mobile sales growth

Gartner reports Western Europe handset sales down by almost four million compared to Q3 2007

Tough market conditions have seen a pitched battle for market share

Global sales of mobile phones rose to 309 million units in the third quarter of 2008, according to Gartner's latest study of the market. But the economic downturn is having a marked effect on sales growth.

Sales in Europe of 43.5 million units were below the 47.2 million units during the same quarter in 2007, which Gartner put down to tough economic conditions. Nokia and Samsung took the top two slots across the global market.

"The global downturn has triggered a three-way battle between Sony Ericsson, Motorola and LG for the third position in the worldwide mobile phone market, which has seen Sony Ericsson emerge as the winner in the third quarter of 2008, " said Carolina Milanesi, research director for mobile devices at Gartner.

"It has also affected sales in both mature and emerging markets during the quarter. Replacement sales in particular were affected, while first-time users continued to see the value of acquiring a mobile phone."

Third-quarter sales grew by just six per cent overall, less than half of the 16 per cent increase seen in the same period last year.

Milanesi said that Nokia suffered at the hands of a slowing economy for the first time, although it retained the highest place in the sales table. Samsung, in second place, had a strong quarter, increasing its sales dramatically against the previous year's quarterly figure of 26 per cent, but it was the battle for third place that was the most interesting.

Sony Ericsson won the number three slot mainly because of problems with the competition, according to the report.

"Sony Ericsson's rise to the third position during the third quarter of 2008 had more to do with the issues that Motorola and LG faced than Sony Ericsson's ability to turn around its business after a few difficult quarters," said the report.

"There have been reports of component shortages for the Xperia X1, Sony Ericsson's long-awaited Windows Mobile-based touch-screen device, so sales are likely to be challenged again."

Gartner added that Motorola had a weak portfolio, and that Apple ranked just seventh in the list despite releasing the 3G iPhone this year.

"All eyes were on Apple's performance during the quarter as it ramped up the roll-out of its 3G iPhone from six to 51 countries, despite building an inventory of just over two million units," said Milanesi.

"Apple was able to return in the top 10 vendors ranking at number seven, just under Research in Motion. We expect that sell-in sales during the fourth quarter of 2008 will reflect this inventory level, especially given the current economic environment."