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The Handset Market Is Getting Darwinian

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269332The economic downturn knocked the wind out of the handset market in the third and fourth quarters of 2008, resulting in shipments of 1.2 billion handsets for the year and overall growth of just 5.4 percent, according to data released today from ABI Research. And it’s only going to get worse. But economic upheaval isn’t just about huge losses, it’s also a chance to snatch market share.

In good times, the weak can stay afloat, but bad times force businesses to prove their mettle (or ask for bailouts). And starting in the second half of 2008, it became a bad time to be a handset maker. ABI said phone shipments were growing at a rate of about 14 percent in the first half of the year when compared to the same period in 2007, but slowed to about 8 percent in the third quarter before declining 10 percent from the fourth quarter of 2007 to the fourth quarter of 2008.

The biggest loser by far was Motorola (s MOT), which gave up 5.1 percent of its market share last year, continuing its ignoble decline. Hopefully Motorola Handset CEO Sanjay Jha has a big ace up his sleeve for 2009, but even then, I’m not sure it’s going to remain a major player for much longer.

Market share winners included LG and Samsung, as well as Apple (s aapl) with its iPhone and BlackBerry maker Research in Motion (s rimm). Nokia (s nok) is holding on, but is coming under pressure as developing economies lower their demand. Next year’s market share distribution is likely to look radically different — some of these names may no longer be a part of it.


5 Responses to “The Handset Market Is Getting Darwinian”

  1. @Stacey,

    Can’t a strong argument be made that the ABI data reflects declines in basic cell phone handsets versus smartphones?

    I’m not sure we aren’t seeing a “normal” decline in the product life cycle of basic cell phones. Most distributors/retailers still have basic cell phones in some if not most of their inventory. As such, i’d expect most of this inventory to be written off given the strong and growing demand for smartphones with wireless data and internet capabilities.

    My $.02.