Pre-Order your new iMac now from MacMall (ships Oct 23) & save hundreds in tax: Apple Price Guides updated Oct 24th (exclusive coupons)
The New AppleInsider App
 


Wednesday, October 08, 2008, 05:00 am PT (08:00 am ET)

Analysts slash 2009 mobile phone market growth predictions

A slowing global economy has analysts predicting significantly less growth in the mobile phone market next year, piling on problems for Nokia, Motorola, and Samsung.

The overall phone market has been steadily growing, although not nearly as fast as the smartphone segment. But next year, UBS analyst Maynard Um expects growth to slow from 6% to just 3%, while JPMorgan analyst Ehud Gelblum cut his more optimistic expectations from 8.1% to 6.1%, according to a report by Reuters.

According to Strategy Analytics, the global cell phone market grew by more than 14% over the previous year in the first quarter of 2008, from 247.2 million units to 282 million. Smartphone growth was even better, with Gartner reporting 29% growth in the first quarter.

Smartphone sales aren't entirely safe however, as Gartner recently reported that growth in the second quarter had already slipped to 15.7% compared to the previous year. Gartner expected smartphone sales to improve in the third however, with analyst Roberta Cozza noting, "Wider availability of new touch smartphone models together with the global introduction of the iPhone 3G will help sales of smartphones return to stronger growth in the third quarter of 2008."

Apple's sales in the second quarter had tapered off to less than a million units as inventories of the original iPhone model were allowed to dry up for weeks in advance of the iPhone 3G. Analysts expect Apple to announce sales of roughly 5 million units for the third calendar quarter that just ended, putting Apple at or near a tie for second place with RIM, and behind smartphone leader Nokia.

Apple in the storm

While every phone vendor is expected to feel the pinch of the global economy, Apple is in the favorable position of being sheltered within the faster growing smartphone segment while selling a differentiated, popular product. Over the last year, Apple's iPod business similarly saw growth in a market where rivals struggled with lost sales. The iPod and iPhone are particularly strong among teens.

Apple's strong brand and the maturity of the iPhone and its App Store should also help set it apart in a tightening economy where consumers will be more conservatively scrutinizing a variety of similar touchscreen offerings from competing vendors who haven't yet finished their own online software stores on their brand new or not yet completed models, including the RIM's BlackBerry Storm, T-Mobile's Android-based G1, and Windows Mobile 6 devices from HTC and Sony Ericsson.

With phone unit prices obscured behind phone subsidies, smartphones appear to offer more desirable features at a retail price comparable to simpler phones. Nokia warned a month ago that it was facing market share losses in the third quarter, and UBS' Um also noted that "many handset vendors are struggling" in addition to Nokia, specifically mentioning second place Samsung and third place Motorola, which has been struggling since 2007 and has nothing new to offer in the pipeline.