Handset market ships 346.2 million in third quarter

The mobile handset market is set for a stellar performance in 2010. The third quarter of 2010 notched up 346.2 million in handset shipments.

For the first three quarters of the year, year on year growth has been hovering around 20%.

“This is a remarkable feat, irrespective of the rebound effect following the deferred handset purchases during the economic recession,” said Jake Saunders, VP for forecasting at ABI Research. “Layer on ‘smartphone-envy’ and you have a recipe for high handset volumes.”

This rebound is having some interesting consequences, said Saunders. He noted that component manufacturers have never had it so good. Nokia in particular reported a hardware crunch, especially with displays (such as AMOLED) and semiconductor components for low cost handsets. Nokia’s leading marketshare in this segment has increased Nokia’s exposure to the component crunch.

Vendors that have strong portfolios in smartphones (RIM, Apple, HTC and Motorola) have seen their growth in marketshare outperform the market. This effect is likely to continue into the fourth quarter of 2010 and into 2011.

ABI warned that unless Nokia can resolve its component resourcing challenges, it is likely to be supply constrained again in the fourth quarter of 2010, a quarter that typically equates to 30% of annual handset sales. “Nokia’s marketshare could well come under further pressure,” added Kevin Burden, VP and practice director for mobile devices.

Handset vendors with greater inhouse ability to source their own components (including Samsung and LG) will be able to take advantage of the market opportunity to expand volumes.

ABI continued that typically, a handset boom period is followed by a market softening as customers wait for the next ‘must have’ handset feature innovation to make its way to the market. We should not be unduly worried, said Burden. There is still considerable room for innovation in the smartphone sector, not just feature innovation, but also cost reduction innovation, which should keep customers keen.

The spotlight has to be put on Apple and RIM, added ABI; they increased their marketshares to 4.1% and 4% respectively. While Samsung did manage to demonstrate quarterly growth (to 20.6%), other vendors contracted: Nokia (31.9%); LG (8.2%); Sony-Ericsson (3%); Motorola (2.6%).