Nokia remains top dog in handsets, despite growing smartphone competition
Samsung is credited by iSuppli as being the "star performer" in the global mobile handset market in 2009 as the only company among the top-five brands to increase both its market share and operating profits.
By Suzanne Deffree, Managing Editor, News -- EDN, February 17, 2010
Nokia achieved industry-leading profitability in 2009, despite increased competition in the smartphone space and the year’s turbulent economy, according to iSuppli Corp.
The handset company finished 2009 with an operating profit of 12.3%, compared to an average of 0.7% for all the top-five wireless handset brands, the market research company reported. Nokia was followed by Samsung, which had an operating profit of 10.5%.
“Facing severe competition from slick rivals including the iPhone and Google Android-based models, Nokia’s leadership position in the global smartphone market began to erode starting in the second quarter of 2008,” said Tina Teng, senior wireless communications analyst at iSuppli, said in a statement. “By the third quarter of 2009, Nokia’s share of shipments had declined to 34.5%, down from a recent high of 44.2% in the first quarter of 2008. However, by the fourth quarter of 2009, Nokia’s share of smartphone shipments recovered to nearly 40%, at 39.5%.”
ISuppli credited Nokia’s end-of-year rebound to its launch of handset models with features like touch-screen displays and QWERTY keyboards. “Enhanced features like touch screens deliver a better user experience and slick operation, putting the ‘smart’ in smart phones,” Teng said.”
However, despite the strong finish to 2009, iSuppli noted that Nokia was not unaffected by the wireless industry’s downturn. Nokia’s shipment of 431.8 million mobile handsets for all of 2009 was down 7.8% from 468.4 million in 2008 and was also slightly worse than the 6.7% decline for the entire handset market. Nokia did maintain its dominant position in the global handset market with a 37.8% share of unit shipments, nearly double that of the second-largest player, Samsung.
Meanwhile, Samsung was credited by iSuppli as being the “star performer” in the global mobile handset market in 2009 as the only company among the top-five brands to increase both its market share and operating profits. For the year, Samsung expanded its share of unit shipments by 3.8% and boosted its profit margins by 1.6%, according to iSuppli data.
ISuppli said it expects Samsung will further improve its profit margins in 2010 as it gradually increases its vertical integration by sourcing more key components from its internal semiconductor business unit.
Third-place LG Electronics gained 2.1% of market share in 2009 and was the top performer among the top five in terms of shipment growth, with a 17% increase for the year compared to 2008, iSuppli reported.
Fourth-place Sony Ericsson was able to maintain its market share at around 5% in 2009, even though the company suffered operational losses throughout the year, iSuppli said, further noting that the company’s 40% drop in revenue has put it in a difficult financial position.
And fifth-place Motorola, which has been operating at a loss every quarter since 2007, managed a slight improvement in the second half of 2009, iSuppli said. The research company noted that Motorola bettered its operating margin by 6.7% in the year as a result of $1.5 billion in cost cuts. Motorola also recently announced it would create two separate companies, one combining its mobile devices and home businesses to target the convergence of mobility, media, and the Internet, and one combining its enterprise mobility solutions and networks businesses to focus on solutions for enterprise, government, and wireless operators.
