FRAMINGHAM, Mass. February 1, 2011 – The worldwide mobile phone market grew 6.1% year over year in the fourth quarter of 2011 (4Q11), as the feature phone market declined faster than anticipated, dragging market growth down to its lowest point in over two years. According to the International Data Corporation (IDC) Worldwide Mobile Phone Tracker, vendors shipped 427.4 million units in 4Q11 compared to 402.8 million units in the fourth quarter of 2010. The 6.1% year-over-year growth was higher than IDC's forecast of 4.4% for the quarter, but weaker than the 9.3% growth in 3Q11.

"The mobile phone market exhibited unusually low growth last quarter, which shows it is not immune to weaker macroeconomic conditions worldwide," said Kevin Restivo, senior research analyst with IDC's Worldwide Mobile Phone Tracker. "The introduction of high-growth products such as the iPhone 4S, which shipped in the fourth quarter, bolstered smartphone growth. Yet overall market growth fell to its lowest point since 3Q09 when the global economic recession was in full bloom."

While smartphones continue to grow in popularity, feature phones still comprise the majority of all mobile phone shipments. "Feature phones accounted for a majority of shipments from four of the five market leaders during the quarter," said Ramon Llamas, senior research analyst with IDC's Mobile Phone Technology and Trends team. "Even though their proportion is eroding, feature phones maintain their appeal on the basis of price and ease of use.

"At the same time, feature phones are fighting to maintain their market share," added Llamas. "To meet the challenge, feature phones are becoming more like smartphones, incorporating mobile Internet and third-party applications. While this may not stem the smartphone tide, it should slow down the rate at which smartphones are selected over feature phones."

Regional Highlights

• In Asia/Pacific (excluding Japan), the feature phone market declined in conjunction with the region's largest feature phone markets – China, India, and Indonesia. The impact on phone demand due to the holiday season, which generally means a sales uplift, was minimal in this category. Meanwhile, smartphones maintained their growth momentum as the iPhone 4S was well received in Australia, Hong Kong, Korea, and Taiwan. Competition in the Android market intensified as mid-range vendors, such as Lenovo, Coolpad, and Huawei, shipped large numbers in their home market of China. Elsewhere, the rest of the Android market was dominated by Samsung, followed by HTC and LG. Windows Phone gained some momentum thanks to sales of the HTC Titan and Radar and Nokia Lumia. In Japan, pent-up demand for mobile phones after last year's natural disasters and weakened economy meant unusually high growth for the country's mobile phone market. Smartphone sellers, such as Apple, fared particularly well while non-Japanese vendors continue to make incremental gains in the market.

• The Western European mobile phone market was impacted by lower demand, a result of the worsening economic environment. Smartphone growth was not enough to offset the feature phones decline, despite excellent performances from Apple and Samsung. Nokia experienced another difficult quarter as a result of its transition towards Windows Phones. Feature phone shipments were near historic lows, supported primarily by very low-end devices. Overall, the Central Europe, Middle East and Africa (CEMA) markets showed strong double-digit growth due in large part to Samsung's continued strength in the regions. Bucking its global troubles, Nokia shipments flattened out in the regions after a strong third quarter, enabling it to remain the market leader in the regions. Apple continued to make quiet progress in the regions as well.

• In North America, smartphones held the spotlight with the launch of the Apple iPhone 4S, while LTE smartphones from HTC, LG, Motorola, and Samsung also made important gains. Research In Motion launched several new phones running on BB OS 7 during the quarter, and signaled a late 2012 timetable for its first BlackBerry 10 smartphones to reach the market, leaving an opportunity to its competitors to attack its market share.

• Smartphones also took center stage in Latin America with the launch of multiple models across the region, particularly sub-$200 Android models. The low price points have enabled broader appeal, and have also found placement among popular prepaid markets. Although smartphones continued to grab attention, low-cost feature phones ruled the market, with strong participation from Nokia, Samsung, and multiple Chinese vendors.

Vendor Highlights

Nokia finished the year exactly where it began: as the undisputed leader of total mobile phone shipments. The company took another step in its storied transition, having officially launched its first Windows Phone-powered Lumia smartphones and its Asha line of smartphone-like feature phones. While both have received positive response from the market, Nokia has been quick to adjust its retail experience, customer engagement, and hardware bug fixes. At the same time, the increased focus on the Lumia, combined with changing market conditions in key markets, has prompted Nokia to change its strategy on Symbian smartphones. Fewer Symbian devices will be sold in 2012. Still, Nokia's broad distribution around the world and manufacturing capabilities make it a serious contender to maintain its leadership position.

Samsung finished the quarter and the year reaching new record levels: breaking the 90 million unit mark for the first time in a single quarter and breaking the 300 million mark for the first time in a single year. Leading the charge for Samsung was its growing smartphone volumes, boosted by the release of several high-end devices (Galaxy S II, Galaxy Note, Galaxy Nexus), mass market models (Galaxy Ace, and Galaxy Y), and new Windows Phone smartphones (Focus Flash and the Focus S). These, along with its own steadily growing feature phone volumes, pushed Samsung closer to market leader Nokia, with fewer than 20 million units separating them in 4Q11.

Apple jumped into the third spot globally from the fifth spot last quarter thanks to a record-breaking quarter of shipments. That represents the Cupertino-based company's highest-ever ranking on IDC's Top 5 global mobile phone leaderboard. The launch of Apple's iPhone 4S smartphone, which is now available in over 90 countries (as of mid-January), was the primary reason the company leapt over LG and ZTE in 4Q11. Device sales in the U.S. and Japan were particularly strong given extra sales days in the quarter and carrier distribution.

LG's total volumes declined for the third consecutive quarter, sinking to levels not seen since the second quarter of 2007. Driving this result was a combination of waning interest in its aging feature phones and stalled smartphone volumes. In addition, from a full year perspective, LG posted the largest full year-over-year decline among the leading vendors. Still, the quarter did have some bright spots, including a return to profitability and a warm reception for its Optimus LTE smartphones across multiple markets. 2012 will feature more smartphones from LG, especially LTE-powered models, but the competition has similar smartphone strategies.

Chinese vendor ZTE nearly tied with LG for fourth place, with fewer than a million units separating the two vendors. Long known as a purveyor of entry level devices, ZTE's smartphones increasingly moved into the spotlight. The company's primary targets included countries throughout Asia/Pacific, but it also gained presence in EMEA and Latin America, and branched out into North America. Key models for the quarter included its popular mass-market Blade and mid-range Skate Android smartphones, and recently the company added its first Windows Phone-powered smartphone, the Tania.

Source: IDC Worldwide Mobile Phone Tracker, February 1, 2012

Note: Vendor shipments are branded shipments and exclude OEM sales for all vendors.

On a full-year basis, the worldwide mobile phone market maintained its upward trajectory by growing 11.1% in 2011, which was down from the 18.7% year-over-year growth experienced in 2010. While part of the slowing growth can be attributed to softening demand for feature phones, IDC expects continued double-digit growth in the years ahead as smartphones continue to capture a greater share of the overall market.

Source: IDC Worldwide Mobile Phone Tracker, February 1, 2012

Note: Vendor shipments are branded shipments and exclude OEM sales for all vendors.

For more information about IDC's Worldwide Quarterly Mobile Phone Tracker, please contact Kathy Nagamine at 650-350-6423 or knagamine@idc.com.

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