John Paczkowski

Recent Posts by John Paczkowski

Smart Phones Selling Far Better Than Dumb Ones

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Global mobile handset sales fell at a record pace in the first quarter of 2009. And they’re likely to do so once again in the second. That’s the grim news today from Gartner, which reports that first-quarter sales of handsets fell to 269 million units, down 14.5 percent from the fourth quarter of 2008 and 9.4 percent from a year earlier.

“There were some signs of a recovery in markets such as North America and China, but overall sales in the first quarter of 2009 registered the biggest quarter-on-quarter contraction since Gartner began monitoring the market on a quarterly basis in 2001,” said Gartner research director Carolina Milanesi. “We really don’t see demand stabilizing before the second half of 2010.”

Demand for low-end mobile phones, that is. Smart phones are doing just fine. Their sales rose 12.7 percent to 36 million units. That’s 13.5 percent of all mobile devices sold in the first quarter, up from 11 percent a year earlier. The chief beneficiaries of this trend: Apple (AAPL) and Research in Motion (RIMM).

Apple doubled its share of the smart phone market in the first quarter of 2009, nabbing 10.8 percent of worldwide sales, up from 5.3 percent in the first quarter of 2008. The company sold 3.9 million iPhones during Q1 2009, more than double the 1.7 million it sold in the first quarter of 2008. Meanwhile, RIM’s share of the smart phone market reached 19.9 percent in the first quarter, up from 13.3 per cent a year earlier. It sold 7.2 million BlackBerry devices to end users, up from 4.3 million in the same period a year earlier.

Incidentally, Nokia (NOK) remains the market leader in smart phones and handsets overall, though its share in both is declining. The company claimed 36.2 percent of the handset market in the first quarter of 2009, down from 39.1 percent in the first quarter of 2008. Its share of the smart phone market dropped to 41.2 percent from 45.1 percent during the same period.

How is it that smart phone makers like Apple and RIM are defying a downturn that’s playing havoc with their dumbphone-manufacturing colleagues? Touchscreens and app stores.

Said Gartner analyst Roberta Cozza: “Much of the smartphone growth during the first quarter of 2009 was driven by touchscreen products, both in midtier and high-end devices. ‘Touch for the sake of touch’ was enough of a driver in the midtier space, but tighter integration with applications and services around music, mobile email, and Internet browsing made the difference at the high end of the market.”

Good news for Palm (PALM), which is bringing a device that fits that bill to market on June 6.


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