Worldwide mobile phone sales totalled 286.1 million units in the second quarter of 2009, a 6.1 per cent decrease from the second quarter of 2008, according to Gartner, Inc. Smartphone sales surpassed 40 million units, a 27 per cent increase from the same period last year, representing the fastest-growing segment of the mobile-devices market.

“Despite the challenging market, some devices sold well as consumers who would usually have purchased standard midrange devices either cut back to less expensive handsets or moved up the range to get more features for their money,” said Carolina Milanesi, research director at Gartner. “Touchscreen and qwerty devices remained a major driver for replacement sales and benefited manufacturers with strong, touch-focused midtier devices. However, the decline in average selling price (ASP) accelerated in the first half of the year and particularly affected manufacturers that focus on midtier and low-end devices, where margins are already slim.”

The recession continued to suppress replacement sales in both mature and emerging markets. The distribution channel has dealt with lower demand and financial pressure by using up 13.9 million units of existing stock before ordering more. Gartner expects the gap between sell-in to the channel and sell-through to customers will reduce in the second half of 2009 as the channel starts to restock.

Nokia maintained its leadership position, but its portfolio remained heavily skewed toward low-end devices. Its flagship high-end N97 smartphone met little enthusiasm at its launch in the second quarter of 2009 and has sold just 500,000 units in the channel since it started to ship in June, compared to Apple’s iPhone 3G S, which sold 1 million units in its first weekend. “The right high-end product and an increased focus on services and content are vital for Nokia if it wants to both revamp its brand and please investors with a more promising outlook in ASPs and margins,” said Ms Milanesi.

Samsung and LG both had a very strong second quarter of 2009 with sales of 55 million units and 30.5 million units, respectively. Samsung’s touchscreen devices, qwerty phones and smartphones drove sales in mature markets, and Gartner expects it will continue to gain market share in the second half of 2009 to close the gap with Nokia. Gartner expects LG to keep moving into lower-tier devices to drive growth in emerging markets and be well-positioned to take advantage of China’s 3G rollout as it can deliver good-value-for-money devices. Motorola’s sales of 15.9 million units were slightly better than expected, but its presence has rapidly concentrated on the Americas, and it has lost most of its share of the Western European market, where it sold fewer than 1 million units in the second quarter of 2009. Most operators and customers will be waiting for Motorola’s new Android-based products planned for the fourth quarter of 2009.

Sony Ericsson’s market share dropped 2.8 percentage points year-on-year in the second quarter of 2009 but its volume dropped 41 per cent. Although the market environment was challenging, Gartner attributes Sony Ericsson’s poor performance to its uncompetitive range of handsets. “Sony Ericsson has neglected to exploit key trends such as qwerty products for messaging and e-mail, internet browsing and navigation. If it wants to build the presence of its three new products announced this quarter in the channel and capture Christmas sales, the products need to come to market early in the fourth quarter of 2009,” Ms Milanesi added.

“Smartphone sales were strong during the second quarter of 2009, with sales of 40.9 million units in line with Gartner’s forecast of 27 per cent year-on-year sales growth for 2009,” said Ms Milanesi. “Given the higher margins, smartphones offer the biggest opportunity for manufacturers. It is the fastest-growing market segment and the most resistant to declining ASPs.”

Apple’s expansion into a larger number of countries in the past year has produced a clear effect on sales volumes, as have the recent price adjustments on the 8GB 3G iPhone. Sales of 5.4 million units in the second quarter of 2009 indicated a 509 per cent growth in shipments and helped Apple maintain the No. 3 position in the smartphone market, where it has stayed since the third quarter of 2008. Apple brought its much-anticipated new device — the iPhone 3G S — to market at the end of the second quarter of 2009, but its full potential will only start to show in the sales figures in the second half of 2009.

At the high end of the smartphone market, HTC remained in the No. 4 position behind Apple, where it has been since the third quarter of 2008. It reported lower expectations for the second half of 2009 due to product delays and now expects 2009 revenue to decline by low- to mid-single digits year-on-year, far below its previous outlook of 10 per cent annual growth.

In the smartphone operating system (OS) market, Symbian held 51 per cent share, down from 57 per cent a year ago, while RIM and Apple grew their shares year-on-year. Android’s share was just under 2 per cent of the market and more Android-based devices will come to market in the fourth quarter of 2009, intensifying competition in the smartphone OS market, particularly for Symbian and Windows Mobile. Microsoft’s share continued to drop year-on-year to account for 9 per cent of the market in the second quarter of 2009.

“Microsoft licensees HTC and Samsung continued to add features to their own interfaces, on top of Windows Mobile, to create more competitive products and make up for the usability constraints of the Microsoft platform,” said Roberta Cozza, principal analyst at Gartner.

This quarter also saw the debut of the long-awaited Palm Pre based on the new web operating system. “This device attracted a lot of media attention but showed mixed results at the cash register as sales only reached 205,000 units,” said Ms Cozza. “Palm currently ranks tenth in the smartphone market and Gartner remains concerned about its ability to gain traction outside the US market, where its brand is less strong.”

“For the remainder of 2009, manufacturers must offer products with the features that consumers and operators are demanding most strongly — like touchscreens, focus on user interfaces and application/content ecosystems — and work hard to keep operators loyal,” concluded Ms Milanesi. “We expect competition to intensify in the second half of 2009. Mobile operators are likely to drive competition among manufacturers as they start selling e-book readers and mini-notebooks from other manufacturers to foster mobile broadband subscriptions. Operators are also starting to subsidise e-book readers and mini notebooks on contract and this means that there will be less subsidy available to drive sales of mobile phones and smartphones. In turn, operators will demand lower prices from phone manufacturers, which will be under even more pressure to deliver strong feature sets at the lowest possible price.”

LiMo Foundation™, a global consortium of mobile industry leaders today announced the newest round of LiMo-compliant handsets has been released to market. Developed by leading device manufacturers and LiMo members NEC and Panasonic Mobile Communications for LiMo board member NTT DOCOMO, these latest handset models offer an array of next-generation features and functionality.

Today’s announcement signals a continued expansion of LiMo’s footprint in the global mobile marketplace, as well as growing industry endorsement and coalescence around its collaborative device platform.

“In February 2009, a number of major network operators announced their intent to launch multiple devices built upon the LiMo Platform,” said Morgan Gillis, executive director of the LiMo Foundation. “This additional line of innovative handsets is indicative of the deep and abiding commitment our operators and device manufacturers hold towards fulfilling that promise by delivering next-generation LiMo technologies.”

Each of the new LiMo handsets offers a variety of advanced functionality and enhancements. Next-generation features including high megapixel cameras, rich media capabilities, and upgraded connectivity support resonate deeply with today’s demanding mobile audience, delivering a richer, more immersive mobile experience. NTT DOCOMO’s commercially shipping LiMo handsets announced today include:

• docomo PRIME series TM N-06A, docomo PRIME series TM N-07A, docomo STYLE series TM N-08A, and docomo SMART series TM N-09A models from NEC; and
• docomo STYLE series TM P-06A, docomo PRIME series TM P-07A, docomo STYLE series TM P-08A, docomo SMART series TM P-09A, and docomo STYLE series TM P-10A models from Panasonic Mobile Communications

“The successful launch of the latest LiMo handsets further establishes LiMo PlatformTM as a leading device platform within today’s rapidly evolving mobile ecosystem,” said Kiyohito Nagata of NTT DOCOMO, chairperson of LiMo Foundation.

With this latest release, the total number of LiMo-compliant handsets rises to 42, the largest number of commercially available mobile handsets produced by any global collaborative development platform organization.

LiMo Foundation was launched in January 2007 by mobile industry leaders to provide the mobile industry with an open, consistent Mobile Linux-based handset OS, enabling the development of immersive, next-generation mobile consumer experiences. LiMo’s membership includes mobile industry leaders from around the world, including OEMs, technology developers, and 12 global network operators representing nearly one billion mobile subscribers.

Apple® yesterday announced financial results for its fiscal 2009 third quarter ended June 27, 2009. The Company posted revenue of $8.34 billion and a net quarterly profit of $1.23 billion, or $1.35 per diluted share. These results compare to revenue of $7.46 billion and net quarterly profit of $1.07 billion, or $1.19 per diluted share, in the year-ago quarter. Gross margin was 36.3 percent, up from 34.8 percent in the year-ago quarter. International sales accounted for 44 percent of the quarter’s revenue.

In accordance with the subscription accounting treatment required by GAAP, the Company recognizes revenue and cost of goods sold for iPhone™ and Apple TV® over their estimated economic lives. Adjusting GAAP sales and product costs to eliminate the impact of subscription accounting, the corresponding non-GAAP measures* for the quarter are $9.74 billion of “Adjusted Sales” and $1.94 billion of “Adjusted Net Income.”

Apple sold 2.6 million Macintosh® computers during the quarter, representing a four percent unit increase over the year-ago quarter. The Company sold 10.2 million iPods during the quarter, representing a seven percent unit decline from the year-ago quarter. Quarterly iPhones sold were 5.2 million, representing 626 percent unit growth over the year-ago quarter.  

“We’re making our most innovative products ever and our customers are responding,” said Steve Jobs, Apple’s CEO. “We’re thrilled to have sold over 5.2 million iPhones during the quarter and users have downloaded more than 1.5 billion applications from our App Store in its first year.”

“We’re extremely pleased to report record non-holiday quarter revenue and earnings and quarterly cash flow from operations of $2.3 billion,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the fourth fiscal quarter of 2009, we expect revenue in the range of about $8.7 billion to $8.9 billion and we expect diluted earnings per share in the range of about $1.18 to $1.23.”