"The fourth quarter was the perfect storm of factors to produce this result," said Ramon Llamas, senior research analyst with IDC's Mobile Devices Technology and Trends team. "A combination of weak end-user demand, currency volatility, and limited credit availability prevented the market from experiencing the usual seasonal increase in shipments. We expect the first half of 2009 to be very challenging as vendors and distributors grapple with clearing inventory. Should these conditions persist, the mobile phone market may not recover until later this year, and possibly not until 2010."
If there was one highlight in 2008 it was that the converged mobile devices segment (commonly referred to as smartphones) grew 22.5% over 2007, clearly outpacing the rest of the industry.
"In mature markets, such as North America and EMEA (Europe, Middle East, Africa), the converged mobile device segment grew 70.1% and 25.0% respectively in 2008," said Ryan Reith, senior research analyst with IDC's Mobile Phone Tracker. "This segment is unique and unlike the rest of the market. Data attachment rates for these devices is well beyond that of traditional mobile phones, and the devices and services catering to this segment were more readily available than ever before in 2008. As long as operators are able to continue to subsidize these devices, and developers continue to enhance applications, then this segment will be a silver lining to an otherwise gloomy market."
- The North America market suffered both sequential and year-over-year declines in 4Q08 as economic conditions worsened. The one bright spot was the converged mobile device market, which posted double-digit growth. Driving this category forward were a combination of positive factors, including strong consumer interest, growing popularity of unlimited calling and data plans, and market leaders Research In Motion and Apple keeping channels stocked with their devices.
- The Latin America mobile phone marketplace showed a slowdown in 4Q08 as falling currency exchange rates led to a decline in both consumer and commercial purchases. Converged mobile device performance was largely flat compared to third quarter results as the shipment numbers from the Apple iPhone launch in 3Q08 could not be sustained for the final quarter of the year, and both Motorola and Palm posted poor results. The traditional mobile phone market also experienced flat growth, marking the first time that this segment did not post two consecutive quarters of year-on-year growth.
- The Western Europe handset market was hard hit by the financial crisis and shrank in the final quarter of 2008 at a rate never before seen. The traditional holiday campaigns and new product launches were not enough to boost sales in comparison with the previous year and almost all vendors experienced a significant slump in sales. While the previously buoyant market in Central and Eastern Europe, the Middle East and Africa did not show a major retrenchment against the last quarter of 2007, the shipments of market leader Nokia were weak and sales of converged mobile devices contracted in relation to the total market.
- As the Asia/Pacific market declined in 4Q08, device makers seeking a respite in the emerging market of China were left disappointed. Chinese consumers held off on mobile phone purchases for much of the quarter, largely due to the worsening economic climate, but also due to some anticipation of 3G promotions in 2009.