“This is a remarkable feat, irrespective of the rebound effect following the deferred handset purchases during the economic recession,” says Jake Saunders, VP for forecasting at ABI Research. “Layer on ‘smartphone-envy’ and you have a recipe for high handset volumes.”
This rebound is having some interesting consequences:
1) Component manufacturers have never had it so good. Nokia in particular reported a hardware crunch, especially with displays (e.g. AMOLED) and semiconductor components for low-cost handsets. Nokia’s leading market-share in this segment has increased Nokia’s exposure to the component crunch.
2) Vendors that have strong portfolios in smartphones (RIM, Apple, HTC and Motorola) have seen their growth in market-share outperform the market. This effect is likely to continue into 4Q-2010 and 2011.
3) Unless Nokia can resolve its component resourcing challenges, it is likely to be supply-constrained again in 4Q-2010, a quarter that typically equates to 30 percent of annual handset sales. “Nokia’s market-share could well come under further pressure,” adds Kevin Burden, VP and practice director for mobile devices.
4) Handset vendors with greater in-house ability to source their own components (e.g. Samsung and LG) will be able to take advantage of the market opportunity to expand volumes.
5) Typically, a handset boom period is followed by a market softening as customers wait for the next “must have” handset feature innovation to make its way to the market. We should not be unduly worried. There is still considerable room for innovation in the smartphone sector, not just “feature innovation” but also “cost reduction innovation,” which should keep customers keen.
The spotlight has to be put on Apple and RIM: they increased their market-shares to 4.1 percent and 4 percent, respectively. While Samsung did manage to demonstrate quarterly growth (to 20.6 percent), other vendors contracted: Nokia (31.9 percent), LG (8.2 percent), Sony-Ericsson (3 percent), Motorola (2.6 percent).
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