The Growth of Cheap Smartphones A Key in the Q1 Handset Market
The very top of the cell phone manufacturers are reporting a large market growth that is sparked by the large demand for the newest smartphones. This is shown in the quarterly earnings reports.
The cell phone vendors really need this as they all experienced a bleak 2009 as the recession put a cap on the amount of money that consumers were spending to get the latest cell phones but yet when it came to the smartphones the market still continued growing throughout the downturn. Part of this can be attributed to the cheaper phones and the newer designs.
The volume growth for the sales looks to accelerate 12.7% within the 1st quarter and will reach a little over 10% this year.
Both LG and Samsun are South Korean companies and they are also the #2 and #3 handset vendors in the world and are completely positioning themselves to carry on with plans to win more of the market share although the LG end result is anticipated to suffer a little bit. The reasons for this is that the delay in the new flagship models launching and a deficiency of a competitive smartphone offered by the company really hurt the LG selling price and could have brought the margins down to almost nothing.
The Smartphone Boom
The top cell phone manufacturer in the world is Nokia and they are projected to gain some of the market share in the quarter in terms of volume which is in most part due to the benefit it is getting from the increased cheap smartphone demand. It does lack the high range of the models in order to put up any battle to the Apple iPhone.
Apple is currently the number three cell phone manufacturer and that is due in part to the success of the iPhone. They are poised to sell right about 7.5 million iPhone’s in the quarter which is down some from the December quarter which was fueled by the holiday sales, however, the sales still double from a year prior.
Gartner, which is a research firm, has forecasted that the market volume is going to grow to 46% by year end. This is due in part for the boost in demand for cheaper and midrange smartphones.
In the February quarter RIM, the maker of Blackberry, reported rising profits and sales and that is helped in part by the stronger sales of the cheaper and more consumer focused products. Even with the rise in sales the results still lagged behind expectations.
LG and Samsung Expected To Struggle with Smartphones
Very weak offerings in the smartphone department from both companies are expected to zap the earnings growth through the year. With that said they are planning on doing some catch-up though that will of course take some time.
The two companies of LG and Samsung together have a share of over 30% of the total cell phone market globally but they have really had struggles when it comes into to the ever growing and very lucrative market of smartphones. This fact couldn’t be made any clearer that when you take the 30% globally the mark that they take from smartphones is only 5%, combined.
Samsung’s margins will likely come under some pressure yet again as the company is looking and set on increasing their spending in order to meet the goal of stopping the smartphone sales freefall and get back into the market in the higher end segment. The rising costs of components are something that could definitely crimp profits.
The new motivation is a good thing for the consumer as the smartphone wars are something that will benefit the consumer with more choices and lower prices in the end.
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Tags: Cell Phones