Weak economy and inventory clear outs blamed for poor mobile phone sales: IDC report

A healthy market for smart phones hasn’t been enough to put mobile phone shipments into the black in Canada. The country’s mobile phone market has now receded for three straight quarters – down 8% between June and September this year, according to preliminary figures released by ICT research firm IDC Canada’s Mobile Phone Tracker. The Tracker also found that handset makers shipped 4% fewer units to wireless service providers and other channel partners in Canada in the third quarter compared to the same quarter last year, despite double-digit converged mobile device growth. Converged mobile devices – defined as having high-level operating systems, such as those found in the BlackBerry and iPhone –are easily the fastest growing operating systems in Canada. And the smartphone market is about to get more interesting, with Dell announcing that it is launching a smartphone in partnership with China Mobile. The initial release of the Dell 3 Mini Smartphone will run on the Open Mobile System, a version of the Android operating system developed by China Mobile. “I would expect to see the Dell device in Canada in 2010,” Michael Morgan, an analyst with ABI Research, tells Tech Media Reports. “There is still significant growth in the smartphone market, and more to come,” adds Kevin Restivo, an analyst with IDC in Toronto. According to Dell, the smartphone will be released on the China Mobile network by late November, and on Brazil's leading wireless network Claro before the end of the year. “This won’t have a lot of bells and whistles; it will be a middle of the road device,” says Morgan, adding that the most likely carrier candidate in Canada would be Rogers Communications’ GSM network, but that the device has to be positioned properly so that it isn’t an “iPhone killer”. It will also be introduced as Canada’s mobile market is going through a shakeout of sorts. Restivo attributed IDC’s weaker-than-expected numbers to the tepid Canadian economy, shrinking traditional phone segment, and a desire on the part of the country’s largest wireless service providers to clear out inventory in preparation for network launches. “Bell Canada and Telus Corp were more or less in inventory clear out mode,” says Restivo. “They were mopping up for the launch of the HSPA+ network earlier this month. As a result, there was less demand for product on the OEM side.” The Dell 3 mini could run on an HSPA+ network, which would potentially give Telus and Bell an Android device to go alongside their joint initiative to launch the iPhone. Rogers already has some experience here: this past summer Rogers launched the HTC Dream and HTC Magic, the first devices in Canada to be powered by the Android platform. In fact, the Dell smartphone might be the perfect device for Canada’s new wireless entrants, because Dell will pressure its supply chain to come up with a device that could really beat up the competition on price. “Dell’s competitive advantage is control of the supply chain,” says Morgan. “They can really squeeze it, offering electronics at a lower cost due to world class supply chain management.” While the Dell 3 Mini has not yet been announced a Canadian release date, Dell does carry agreements with Vodafone in Europe and AT&T and Verizon in the US market. There has been a wave of Android-based device announcements recently with Verizon touting its latest iPhone killer the Droid. This might help explain why IDC’s numbers have the Canadian market performance standing in stark contrast to that of the United States, which posted positive results, as converged mobile devices and prepaid handsets drove growth for the world’s largest mobile phone market. “In Canada we are still in the Jurassic age as far as smartphones go,” says Restivo. “As far as development and adoption goes, there is a ton of growth to be had.” On the OS side, there is a lot of talk of how Google’s Android might compete against the BlackBerry, but ABI’s Morgan feels this is overstated. “This is not a threat to BlackBerry in the enterprise space,” he says. “Android is not an approved OS on the enterprise side – the Dell 3 Mini Smartphone will be rolled out on the consumer side. And what about Microsoft Corp? “Microsoft is in maintenance mode right now,” says Restivo. “They are prepping for the launch of Windows 7 at some point in 2010, and we expect a bump in sales then.” Overall, IDC still expects Canadian mobile phone manufacturers to ship approximately 3% fewer devices on a sell-in basis when compared to 2008 due to lower demand caused primarily by the weaker economy.

Weak economy and inventory clear outs blamed for poor mobile phone sales: IDC report

News | November 16, 2009

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