Don't expect the mobile phone market to make a comeback this year. Handset shipments in the second quarter fell 10.8% from a year ago, according to the latest figures from IDC, and the technology research firm forecasts the worldwide market will decline 13% in 2009. The second quarter drop wasn't quite as bad as the 17.2% fall-off in the previous quarter.
Smartphones remained the lone bright spot for handset makers, with Nokia, Samsung, Research In Motion, and Apple beating expectations for high-end devices in the second quarter. The launch of the Palm Pre and iPhone 3G S in June in particular boosted smartphone shipments in the North American market, while Apple's slashing of the iPhone 3G's price to $99 igniting a price war among wireless operators and phone makers.
"Apple's price cut on the iPhone 3G reflects a trend we expect to continue in the upcoming quarters, and one that will effectively maintain competitive pricing within mature markets," according to Ryan Reith, senior research analyst with IDC's Worldwide Quarterly Mobile Phone Tracker. That's good news for consumers and a trend that's already underway with Verizon Wireless recently halving the price of the BlackBerry Storm to $99.
The IDC report also highlights the strong demand for prepaid phones by budget-conscious customers, suggesting growth at the high and low ends of the mobile market but not much in between. The strength of the prepaid segment was underscored this week in Sprint's acquisition of Virgin Mobile USA and its addition of 938,000 prepaid customers through its Boost Mobile unit.
But according to IDC there were also signs of improvement for mid-tier and high-end feature phones in the second quarter in North America, with the arrival or increased shipments of devices such as the Samsung Propel and LG's Versa and Xenon.