Mobile Phone Growth Slows, Consumers Wait For New Products

Smartphone-NokiaMobile phone sales in the third quarter saw slowing growth as consumers delayed smartphone purchases and tightened spending overall. Phone shipments worldwide increased 12.8% to 394 million units in the quarter compared to 349 million in the year-earlier period, according to new data from research firm IDC.

That rate was up from 9.8% in the second quarter, but well below the nearly 20% growth from the first quarter and similar gains in 2010. IDC said mature markets like the U.S. and Europe in particular were hardest hit, as shipment volume in both regions dropped from a year ago. The firm had predicted only 9.3% growth in the quarter.

"The combination of economic uncertainty and anticipation over fourth-quarter or late third-quarter product releases caused some consumers to delay their smartphone purchases," said Kevin Restivo, senior analyst at IDC. "Many waited for products, such as the iPhone 4S, which was announced after the quarter closed, or Research In Motion's BlackBerry 7 phone series, which were released in the final weeks of the quarter."

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Apple missed Wall Street forecasts for iPhone sales and earnings in the quarter. Consumers held back from buying until the company released the latest version of its signature device earlier this month. While increasing share of global phone sales slightly to 4.3%, the company also slipped a notch behind China-based ZTE to fifth place in the ranking of largest handset makers.

Fewer iPhone activations in the third quarter also impacted the earnings of AT&T and Verizon Wireless, Apple’s U.S. wireless partners.

IDC noted that smartphone competitors released new devices in an effort to fill the smartphone void left by Apple in the quarter. Beleagured Research in Motion released several new BlackBerry models running the latest version of its phone operating system, while LG, Motorola and Samsung unveiled their own Android-based flagship handsets. 

Smartphones will continue to drive the overall phone market regardless of quarterly fluctuations.

"Two years ago, smartphones comprised just a small portion of overall shipments among the leading vendors,” said Ramon Llamas, an IDC senior analyst. “Today, that proportion has grown considerably, thanks in large part to LG, Motorola, Samsung and Sony Ericsson making Android smartphones a priority.”

IDC will release its report focusing on smartphone shipments in the third quarter next week.

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