TechWeb

iPhone, Smartphones May Be Recession-Proof As Sales Hold Up

Oct 30, 2008 (01:10 PM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=211800367


Mobile phone shipments are maintaining their forward momentum even as the economic crunch squeezes consumers tighter, according to a report issued Thursday by ABI Research, which said handset shipments were up 8.2% in the third quarter.

The news wasn't all rosy, however, as the market research firm lowered its earlier prediction that sales would rise 10.4% in the current quarter. ABI now foresees growth in the fourth quarter of a still-respectable 7.5%.

"Given the traumatic news ricocheting around the financial markets, one would almost expect mobile handset markets to have nosedived," said ABI Research VP Jake Saunders in a statement. ABI noted that mobile phones offer important new functional improvements in memory, battery life, and data speed -- all contributing to a sense of value to acquiring a new mobile phone.

Another Thursday report by ComScore seemed to support the ABI findings. In an examination of the demographics of the iPhone, ComScore found that its strongest growth is coming from lower-income consumers, many of whom likely view their iPhones as replacing multiple digital devices.

"As an additional household budget item, a $200 device plus at least $70 a month for phone service seems a bit extravagant for those with lower disposable income," said ComScore senior analyst Jen Wu, who authored the iPhone report. "However, one actually realizes cost savings when the device is used in lieu of multiple digital devices and services, transforming the iPhone from a luxury item to a practical communication and entertainment tool."

Consumers with income between $25,000 and $50,000 acquired iPhones in a higher growth percentage -- 48% -- while consumers with $100,000 and up income recorded a much lower growth percentage -- 16% -- in acquiring iPhones.

At 2.2%, the iPhone still has a relatively low share of the cell phone market, according to ABI. Nokia still leads the market-share numbers with 37.7%, which accounts for more phones than the next three handset suppliers combined.

Samsung held down the second-place spot with 16.6% market share, followed by Sony Ericsson with 8.2% and Motorola with 8.1%. LG captured 7.4% of the market.

Motorola has been losing market share rapidly, as evidenced by its third-quarter report Thursday in which it said its mobile handset shipments declined to 25.4 million in the third quarter from 28.1 million in the second quarter. ABI calculates its market share report on year-on-year statistics.