Samsung & ZTE up, Nokia out

31 Oct 2012

Nokia attracted headlines last week as it dropped out of the top 5 list of smartphone makers for the first time since the category ranking was created in 2004 by IDC. The Finnish company saw its market share drop to 3.5% (shipping just 6.3m smartphones compared to 56.3m sold by Samsung) -- pushing it below RIM, ZTE and HTC. Nokia led the smartphone category as recently as Q2 2011.

While much of the focus was on Nokia's decline and Samsung's rise (doubling smartphone shipments in the quarter and adding 8.6 percentage points to its market share -- now 31.3%), there was less attention on Apple, which is now third in total handset shipments with a 6.1% share.

iPhone shipments increased 57% to 26.9 million units in Q3 from a year earlier -- outpacing both LG, whose overall sales dipped by 7 million to 14 million units (a 33% fall), and ZTE, which saw shipments decline 22% to 13.7 million units.

That is quite a reversal for the Chinese firm, which saw handset shipments increase 32% to 18.5 million units in Q3 2011 -- propelling it into fourth place. The rise was short lived as it slipped to fifth (3.1% share vs 4.1% a year ago). But in the smartphone segment ZTE managed to move from fifth to fourth place for the first time as shipments jumped 83% to 7.5 million units, with a 4.2% share (sandwiched between RIM with 4.3% and HTC with 4%.). More than half the phones it produces are now smartphones.

RIM actually moved into third from the fifth position in Q2 despite a 35% drop in shipments to 7.7m. A year ago its share was close to 10%.

Overall handset sales in the quarter edged up just 2.4% to 445.5 million, according to IDC. Smartphone shipments meanwhile rose 45% to 179.7 million.

It's interesting to remember that Nokia a year ago was the top global handset producer, with a 24.5% market share (down from 32% in 2010) and Samsung was No. 2 with a 20% share. Now Samsung is on top with a 23.7% share and Nokia is second at 18.7%. What is most shocking thought is that Nokia sold 23 million fewer handsets in the last quarter than a year ago (82.9 million vs 106 million) while Samsung shipped 21% more (105.4 million).

Based on its performance over the past year, and unless Windows Phone works some amazing magic for Nokia, it looks like Samsung will be on top for sometime. But merely being a top handset marker doesn't have much weight in the market these days, given the thin margins on feature phones. With smartphones accounting for 53% of its handset sales, Samsung's margins are certainly second only to Apple. For Nokia, smartphones now represent less than 8% of mobile phone shipments -- ouch!

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