Nokia, Apple win as phone sales bounce back

IDG News Service - Nokia and Apple were the big winners as the sale of mobile phones rebounded during the fourth quarter. Consumers, meanwhile, stand to get more choice and better value for money as competition heats up, especially in the smartphone segment.

A total of about 325.3 million units were shipped by vendors in the fourth quarter, compared to approximately 292.4 million units during the last three months of 2008, according to IDC.

Both Nokia and Apple expanded unit sales by about 17 percent, compared to the previous quarter. Apple said it sold 8.7 million iPhones, which is a new record.

Since the arrival of the iPhone, Nokia has struggled in the smartphone segment. During the fourth quarter Nokia made a comeback, but still has to work on improving the user interface on its devices, according to Francisco Geronimo, research manager for European Mobile Devices at IDC. Nokia's smartphone portfolio will go from "good" to "great" this year, Nokia CEO Olli-Pekka Kallasvuo said during a conference call on the company's fourth-quarter results.

Nokia sold a total of 126.9 million phones, including 20.8 million smartphones, during the fourth quarter, it said on Thursday.

The smartphone market has been carrying the overall phone market during 2009. The smartphone market grew by nearly 30 percent during 2009, according to estimates from IDC. That compares to a drop of about 5 percent for the overall market, IDC said.

This year, smartphones will continue to gain momentum. Consumers will be able to choose from a larger selection of devices, according to IDC. For example, LG recently said it will launch 20 smartphones, including 10 based on Android, in 2010. Motorola, ZTE and other vendors also have more Android-based smartphones on the way.

Also, the price of smartphones will continue to decrease in 2010, according to IDC.

However, the extent to which consumers will actually see those price cuts remains to be seen, according to Geoff Blaber, analyst at CCS Insight. Consumers in markets were phones are subsidized by operators, in exchange for consumers signing a contract, aren't going to see a huge difference, he said.

"We may see some higher-end devices on cheaper or shorter contracts," said Blaber.

Samsung and LG also shipped phones in record numbers in the fourth quarter: 68.8 million and 33.9 million units, respectively.

However, the growth came at a cost. For example, LG's margins took a hit thanks to price declines and higher marketing costs, according to IDC.

Sony Ericsson and Motorola continued to struggle, selling 14.6 million and 12 million phones, respectively.

Motorola is moving in the right direction, with its bet on becoming smartphone vendor, according to Blaber. Currently, Motorola's main concern is making a profit, not market share, Blaber said.

Sony Ericsson was also helped by a boost in smartphone sales, according to IDC, and the company has high hopes for its first Android-based device, the Xperia X10.