GfK Reports on Mobile Handsets

GfK Equity Research reports on mobile handsets market in first quarter

April 14, 2005

2 Min Read

NUREMBERG, Germany --

A Pretty Good European Quarter but a Soft Finish

The West European mobile handset market grew 13% y-y in Q105, a 23% sequentialdecline from Q404, which is slightly softer than expected. Wholesale/unsubsidised pricingbounced back 2.5% from the holiday gifting period, in-line with seasonal trends. During thequarter, both GSM & WCDMA sales slowed, which may have dampened mid-Q re-order rates.

Still, we reached a vital economic milestone: For two years the market fragmented – eachmodel took an ever smaller share, diluting economies of scale in sourcing, manufacturing,distribution, and merchandising. This environment disfavours incumbent vendors and erodesASP for everybody. However, the trend reversed in Q1, led by the spectacular Nokia 6230,which became the first European phone in two years to break the 5% unit share barrier.

Consequently, Nokia gained significant share, as did Samsung and Motorola.

European WCDMA Struggling

The mix of 3G handsets sold in Western Europe peaked with a hugely successful Hutchison/3 promotion in November. And although WCDMA still provides in excess of one-half theregion’s growth, WCDMA has struggled as British consumers turned a cold shoulder andtraditional operators dragged their feet.

Managing Director Tom Dailey observed, “the weakness seems partly due to limited handsetselection, part cannibalisation fear amongst operators, and part consumer scepticism. We stillhave a shot at 25 million 3G units this year, but it’s all out the window if Germany doesn’t buildmomentum in Q2.”

China: getting the rich richer…

China showed double-digit unit growth in Q1 with a very strong holiday sales period andcross-over sales from declining PHS market. CDMA declined in the quarter and similarlyremains just a fragment of the China market. In GSM the same brands who gained significantshare in Europe in Q1 also led China in Q1. Nokia finally locked up the final title belt it did notyet hold: it is now China’s #1 brand in value as well as units.

GfK Retail & Technology, the world’s largest producer of sales data for technology products,is part of the GfK Group, which generated €671 million turnover in 2004 with 5,500 employeesin 57 countries. This EU11 data set represents western Europe from Scandinavia to Italy, UKto Poland, and the Iberian peninsula to Turkey; it adds up to about 32 million units sold to endusers in the period.


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