The global handset market marked a new milestone at the close of 2006, with more than a billion units shipped worldwide over the year, a market research firm said in its latest report.
According to IDC's Worldwide Quarterly Mobile Phone Tracker, vendors shipped a total of 1.019 billion units last year, or 22.5 percent more than the 832.8 million units they shipped in 2005.
For the quarter ending December 31, 2006, vendors shipped a total of 294.9 million units, or 19.7 percent more than the 246.4 million units they shipped during the final quarter of 2005. This also marked a record shipment volume for a single quarter, IDC said.
"Emerging markets contributed to the high volume sales," said Ramon Llamas, a research analyst in IDC's Mobile Technology and Tracking team.
"It was not long ago that shipments into mature markets, including Japan, North America, and Western Europe, consumed the majority of devices shipped worldwide. More recently, however, device shipments into emerging economies in Asia-Pacific, Central and Eastern Europe, the Middle East, Africa, and Latin America have surpassed shipments to mature markets, and the difference between the two continues to grow."
IDC expects this trend to continue as mature markets reach saturation and emerging markets, with much lower teledensity, provide ample opportunity for handset vendors to attract first-time users, he said.
"In addition, the time to set up a mobile network is much shorter and less expensive than the time to set up a landline network, propelling cell phone shipments further. Finally, mobile phones are seen as both a practical necessity and a status symbol in many emerging markets," Llamas said.
"Together, these economic, technological, and social conditions will continue to drive strong demand for mobile handsets in emerging markets for some time to come."
While mass handsets for emerging markets were a key factor in the fourth quarter results, there were some very innovative and stimulating technologies introduced to the world of mobility, IDC said. Location-based services have come to life across many regions, with Nokia's acquisition of Gate5, a leading supplier of mapping and navigation services, reinforcing this trend, it noted.
Top-tier vendors led the pack in terms of shipments in the final quarter of 2006. Although some of them enjoyed record shipments, they also experienced thinning profit margins, said IDC.
Nokia remained the worldwide leader in mobile phone shipments in the fourth quarter, shipping more than a million units on average each day during the quarter.
The vendor experienced, however, downward pressure on its profits from the same quarter last year - the result of shipping massive volumes of entry level devices, IDC said. Nokia's converged mobile devices also continued to outpace all other vendors shipping 11.1 million units, making Nokia the leader in this space as well.
Slightly off target
Despite reaching a record level of shipments during the fourth quarter, Motorola missed its fourth quarter 2006 profit target, landing at an operating profit of 4.4 percent. The company acknowledged challenges within its product portfolio mix and its late introduction of 3G devices. To combat this, the company announced plans to tighten control over its expenses and eliminate 3,500 jobs worldwide, as well as introducing more 3G devices in various markets. From a device perspective, Motorola continues to tout "wickedly compelling" products with several devices based on its successful RAZR platform, the stylish MOTOFONE for emerging markets, and the dual-mode CDMA/iDEN ic 502.
"Samsung edged above the 30 million unit mark twice in 2006, exceeding its sales target for the year. The introduction of its Ultra Edition handsets buoyed shipments in Europe and Asia, and its Blackjack bolstered its converged mobile device lineup during the fourth quarter.
"For the year, Samsung solidified its position as the No. 3 vendor worldwide, but fell further behind second-place Motorola."
Fourth-place Sony Ericsson waged a strong campaign during the fourth quarter to slash the difference between the two companies to just six million units, the market research firm added.