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"Emerging markets contributed to the high volume sales," said Ramon Llamas, research analyst in IDC's Mobile Technology and Tracking team. "It was not long ago that shipments into mature markets, including Japan, North America, and Western Europe, consumed the majority of devices shipped worldwide. More recently, however, device shipments into emerging economies in Asia/Pacific, Central and Eastern Europe, the Middle East, Africa, and Latin America have surpassed shipments to mature markets, and the difference between the two continues to grow."
IDC Technology - Mobile handsets
"IDC expects this trend to continue as mature markets reach saturation and emerging markets, with much lower teledensity, provide ample opportunity for handset vendors to attract first-time users. In addition, the time to set up a mobile network is much shorter and less expensive than the time to set up a landline network, propelling cell phone shipments further. Finally, mobile phones are seen as both a practical necessity and a status symbol in many emerging markets. Together, these economic, technological, and social conditions will continue to drive strong demand for mobile handsets in emerging markets for some time to come," added Llamas.
Emerging markets - Innovative & Stimulating technologies
While mass handsets for emerging markets were a key factor in fourth quarter results, there were some very innovative and stimulating technologies introduced to the world of mobility. Location-based services have come to life across many regions, with Nokia's acquisition of Gate5, a leading supplier of mapping and navigation services, reinforcing this trend. Meanwhile, the so-called prosumer space also gained salience with the launch of the Pearl from Research In Motion.
"We believe the Pearl was a trend-setting device because it was the first pro(con)sumer release from a company that has always been associated with strictly business-focused users," said Ryan Reith, research analyst in IDC's Worldwide Mobile Phone Tracking Group. "It is no secret that the vast majority of people in society use email, regardless of their profession, and a device like this has made mobile email more of a reality. Elsewhere, mobile TV, which has been talked about for many years, is finally coming to the forefront in select markets. It now appears that mobile advertising will play a key role in the adoption of mobile TV by consumers, although a lot remains to be said about how consumers will take to this. Finally, location-based services are now gaining traction in the industry and leading vendors are moving to provide comprehensive, end-to-end solutions. Shipments of GPS-enabled handsets are certain to grow in most regions in 2007." From a vendor perspective, the story line behind the fourth quarter of 2006 was similar to that of the third quarter, where some of the world's top-tier phone vendors reported record shipments yet declining profit margins.
Top Five Mobile Phone Vendors
Nokia ended the year in much the same way it began the year, as the undisputed worldwide leader in mobile phone shipments. Having reached a new shipment record--more than a million units on average each day during the quarter - Nokia experienced downward pressure on its profits from the same quarter a year ago, the result of shipping massive volumes of entry-level devices. At the other end of the product spectrum, Nokia's converged mobile devices continued to outpace all other vendors shipping 11.1 million units, making Nokia the worldwide leader in this space as well.
Despite reaching a record level of shipments during the fourth quarter, Motorola missed its 4Q06 profit target, landing at an operating profit of 4.4%. The company acknowledged challenges within its product portfolio mix and its late introduction of 3G devices. To combat this, the company announced plans to tighten control over its expenses and eliminate 3500 jobs worldwide, as well as introducing more 3G devices in various markets. From a device perspective, Motorola continues to tout 'wickedly compelling' products with several devices based on its successful RAZR platform, the stylish MOTOFONE for emerging markets, and the dual-mode CDMA/iDEN ic 502.
Samsung edged above the 30 million unit mark twice in 2006, exceeding its sales target for the year. The introduction of its Ultra Edition handsets buoyed shipments in Europe and Asia, and its Blackjack bolstered its converged mobile device lineup during the fourth quarter. Based on the recent success of these devices, Samsung expects to ship 133 million devices in 2007. For the year, Samsung solidified its position as the number three vendor worldwide, but fell further behind second-place Motorola. In addition, fourth place Sony Ericsson mounted a strong campaign during the fourth quarter to cut the difference between the two companies to just six million units.
Sony Ericsson took another step to distance itself from LG Electronics, and moved a step closer to Samsung this quarter, with 4Q06 shipments landing at the midpoint between the two Korean vendors. The company's portfolio has long been considered replete with high-end devices, including several Walkman-branded phones and several converged mobile devices. The success of its entry-level devices, including the J200, J300, and Z300, have brought more depth to Sony Ericsson's portfolio, extending its reach to more customers, particularly in emerging markets. Of the leading vendors, Sony Ericsson earned honors of having the largest year-on-year change, both for the fourth quarter and for the full year.
LG Electronics marked record shipments during the fourth quarter, but profits did not keep up with volume, a result of price cuts on some of the company's leading models. Profits for 2006 were a staggering 72.9% lower than 2005 profits, and the company plans to take an aggressive approach to anticipate market demand. This includes introducing more key devices to the market, expand its presence in emerging markets, and enhance position and brand in mature markets.
These small, battery-powered, voice-centric devices utilize operator-provided cellular/PCS air interfaces for voice communication. They are designed primarily, in both form factor and feature set, for a compelling mobile telephony experience, but may also include text-messaging capability. Mobile phones may include a headset jack for hands-free operation as well as a variety of features, such as personal information management, multimedia, games, or office applications. Mobile phones exist at all points along the form factor, price point, and feature set continua. Mobile phones that combine voice communications capabilities with pen or keypad handheld data features are tracked within the Converged Devices category.
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