Smart phone boost in European phone market

The Western European mobile phone industry felt the impact of the global financial crisis in the third quarter of 2008, as total handset shipments decreased significantly over previous quarters. Mobile phone manufacturers shipped 45.8 million handsets in 3Q08, down 8.0% from the previous year and up 5.1% over 2Q08. The third quarter has historically been a ramp-up period as manufacturers load their sales channels with handsets in preparation for the holiday season, resulting in year-on-year growth as high as 20%. However, this year has not witnessed a similar ramp up, largely due to the current economic situation.

"Mobile phone manufactures felt the pressure of the gloomy economy in 3Q08, and as a result shipments were down significantly. Consumers are delaying replacing handsets, which is lowering replacement rates in Western Europe. This is particularly significant in countries where penetration rates are over 100%," said Francisco Jeronimo, research manager with IDC's European Quarterly Mobile Phone Tracker.

While the overall mobile phone market in Western Europe registered negative growth compared to the previous year, the market for converged mobile devices (commonly know as smart phones) posted a 58.0% increase year on year and 17.9% sequentially. "The release of the iPhone 3G earlier this summer in 15 European countries not only marked a major step for Apple but also raised interest in converged mobile devices as a whole, and particularly among consumers, not just enterprises," said Jeronimo.