Growth in the handset market in the United States remains healthy, and recent market-share figures for vendors paint a markedly different picture than the global scene.
Handset sales in the first quarter grew 12% from the year-ago quarter, with the sale of about 39 million units valued at nearly $3 billion, according to new data from The NPD Group. That growth is roughly similar to the year-ago quarter’s 11% growth.
In a reversal of global trends, Motorola Inc.’s market share in its home market grew to 35% in the first quarter, up from 29% in the year-ago quarter. Global leader Nokia Corp.’s share sank from 19% to 10% in the same period, taking the vendor from second place in the United States to fourth. (Globally, Nokia is forecasting a market-share increase above 36% next quarter, while Motorola has dropped from about 21% to 17%.)
NPD’s U.S. figures reflect that Nokia’s decline here allowed Samsung Electronics Co. Ltd. and LG Electronics Co., with static market shares of 17% and 15%, respectively, to move into the No. 2 and No. 3 spots. Sanyo Corp., which sells handsets exclusively through Sprint Nextel Corp. and some of its MVNO partners, garnered No. 5 in the first quarter with 4% market share, displacing Kyocera Wireless Corp., which had been No. 5 last year with a similar share.
Ross Rubin, director of wireless analysis for NPD, said Motorola’s Razr “juggernaut” told much of the story between Q1 2006 and Q2 2007. A year ago, Motorola had seven Razr models on the market. By last quarter, it had 21. Sprint Nextel Corp. added the Razr to its portfolio in the past year, adding to the pool of potential Razr customers.
Gap in Nokia portfolio
Nokia, in contrast, suffered for not having a credible entry in the thin clamshell product segment, according to Rubin. Though the Finnish vendor appeared to have established some brand loyalty among older American consumers, who tend to hang onto their handsets longer, it has not captured the attention of younger Americans, who have been driving handset sales, the analyst said.
“If the Razr exemplifies what fashion-conscious consumers are being drawn to, that also points to a gap in Nokia’s portfolio,” Rubin said.
As for Sanyo’s climb, Rubin said that the vendor’s Katana handset had embraced the thin trend and gotten a significant push from Sprint, at least prior to the Razr’s appearance at that carrier. Sanyo’s success coincided with a loss for Kyocera at Alltel Corp., where it once claimed as much as one-third of that carrier’s handset business, which since has dwindled.
Though handsets have given carriers an attractive lure to keep existing subscribers and find new ones, Rubin said, the foregoing data underscores the critical importance to the handset vendors of maintaining SKUs (stock-keeping units) at the top-tier carriers.
Samsung and LG have succeeded at that game, according to the NPD analyst. LG has secured premium placement of its products at Verizon Wireless, while Samsung has consistently ranked in the top five-often the second or third-vendors at all four top-tier carriers.
The NPD data also reflected that handset sales are increasingly the domain of network operator retail stores. The latter’s share of all handset sales rose to 63% in the first quarter from 60% in the year-ago quarter.
That may increase the U.S. market-share challenge for Nokia, which recently reiterated its dedication to meeting the needs of top-tier carriers, and for Sony Ericsson Mobile Communications, which does not appear in NPD’s top five list this year or last. Both Nokia and SEMC have struggled to gain traction in the top-tier carriers’ portfolios, in part because 60% of the U.S. market-and two of the top four carriers-are on CDMA networks. SEMC eschews CDMA altogether while Nokia is taking an ad-hoc approach with various handset partners to meet that market. Both vendors rely more heavily than competitors on alternative distribution channels.
