In case it was still unclear whether mobile phone sales will shrink next year, Reuters has published the results of a poll that shows analysts predicting that phone sales will fall at their fastest rate ever and unsold phones will begin piling up in stores. On average, Reuters said the poll of 36 analysts expect sales during the typically strong holiday fourth quarter will drop by 5.7 percent worldwide, and next year volumes will shrink by 6.6 percent. The outlook has continued to become drearier with analysts saying only back in November that the market would rise by 2.6 percent in 2009. But since that time, Nokia (NYSE: NOK), Samsung, Sony (NYSE: SNE), and Texas Instruments have all provided warnings about consumer spending. “A five to 10 percent decline is the best guess at the moment,” said Nordea analyst Martti Larjo. “This can move either way: If the economy continues to go downward the numbers could be worse. But while growth is not impossible, it’s unlikely.”
This downturn will be different than the last one in 2001 when the market fell by 6 percent. During that year, replacement sales tumbled, but sales to first-time subscribers continued to grow. During this downturn, there are fewer people who are becoming subscribers. Because of this, analysts are concerned about the build-up of large inventories. LG (SEO: 066570) and Samsung are the most likely to do this as they try to reach respective annual sales targets of 100 million and 200 million phones.
The downturn is likely to re-shuffle the market leaders. LG is expected to grab the No. 3 spot from Sony Ericsson; Nokia and Samsung are expected to increase their market shares to 39.6 percent and 17.3 percent respectively; and Motorola (NYSE: MOT) is forecast to lose the most market share, with the wide range of estimates, from 55 million to 100.7 million phones.
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