Strong Demand for Smartphones in Second Quarter Continues to Drive the Worldwide Mobile Phone Market, According to IDC

  Strong Demand for Smartphones in Second Quarter Continues to Drive the
  Worldwide Mobile Phone Market, According to IDC

Business Wire

FRAMINGHAM, Mass. -- July 27, 2012

The worldwide mobile phone market grew 1% year over year in the second quarter
of 2012 (2Q12), as Samsung and Apple shipped almost half of the world's
smartphones. According to the International Data Corporation (IDC) Worldwide
Quarterly Mobile Phone Tracker, vendors shipped 406.0 million units in 2Q12
compared to 401.8 million units in the second quarter of 2011.

Samsung and Apple have more than doubled their combined market share over the
past two years, which has created more distance between the companies and the
competition. "Samsung and Apple have quickly become the global smartphone
heavyweights though both employ somewhat different approaches to the market,"
said Kevin Restivo, senior research analyst with IDC's Worldwide Quarterly
Mobile Phone Tracker. "Samsung employs a 'shotgun' strategy wherein many
models are created that cover a wide range of market segments. Apple, in
contrast, offers a small number of high-profile models. While both companies
have expanded their geographic presence in pursuit of market share, the two
companies will inevitably come into greater conflict as both try to generate
additional gains."

Market share gains will be harder to generate, however, if the worldwide
smartphone market grows at rates similar to the 42.1% year-over-year rate at
which the market increased in 2Q12. This was the lowest growth rate since the
fourth quarter of 2009. Vendors shipped 153.9 million smartphones in 2Q12
compared to 108.3 million units in 2Q11. The 42.1% year-over-year growth was
one percentage point lower than IDC's forecast of 43.1% for the quarter.

The spectre of further economic woes puts growth prospects for the mobile
phone market at risk. "With half of 2012 behind us, vendors are looking ahead
to 2013 and how key markets – particularly Europe and emerging markets – will
play out," said Ramon Llamas, senior research analyst with IDC's Mobile Phone
Technology and Trends team. "Despite recent maneuvers to shore up several
countries within the Eurozone, the effectiveness of these efforts remains to
be seen. Meanwhile, emerging markets will continue to be strong contributors
due to their sheer size and growth trajectory, but how much they can offset
potential declines in other countries is unclear."

Nonetheless, IDC expects long-term mobile phone and smartphone shipment demand
to grow steadily in 2012 and through the years ahead due to the central role
mobile phones play in people's lives. "For many users, the mobile phone has
become the essential communications link to others and to the world," noted
Llamas.

Smartphone Vendor Highlights

Samsung extended its lead over Apple during the second quarter, taking
advantage of Apple's release schedule and launching its flagship Galaxy S III.
In addition, Samsung experienced continued success of its smartphone/tablet
hybrid device, the Galaxy Note. As a result, Samsung topped the 50 million
unit mark and reached a new quarterly smartphone shipment record in a single
quarter. What remains to be seen is how the company’s smartphones will fare
against Apple's next-generation iPhone expected later this year.

Apple posted an expected sequential decline last quarter, similar to years
past. The quarter-over-quarter shipment decline came six months after it
unveiled its latest iPhone. The decline is not unusual as iPhone shipment
volume is highest in the first two quarters after its release. The company’s
once-a-year release cycle usually results in two quarters of lower volumes
leading up to the next-generation model introduction. Nonetheless, Apple made
significant inroads into new markets and segments, including smaller regional
carriers and prepaid service providers.

Nokia smartphone business underwent another quarter of transition. Demand for
Symbian and MeeGo units declined, reaching levels not seen since 2005 though
the company almost doubled its Windows Phone shipments from the previous
quarter. Nokia’s Lumia sales were not terribly affected by Microsoft's Windows
Phone 8 announcement, which will prevent current Lumia owners from upgrading
to the new mobile operating system. However, Lumia sales have remained steady
and key enhancements available on the new platform will eventually become
available to current Lumia owners. Nokia, however, has a long path to travel
before it can reclaim previous volume levels and challenge Apple and Samsung
for smartphone supremacy.

HTC rebounded from its struggles in the two previous quarters to reclaim the
number 4 spot in the smartphone vendor rankings. Its relatively strong
performance in the Asia/Pacific region allowed it to climb back up the rank
order as did the correction of its channel inventory issues. The company's
streamlined portfolio means future share gains will be predicated upon the
success of its One products.

ZTE climbed into the smartphone Top 5 for the first time thanks primarily to
shipments of its lower-cost entry-level smartphones in China, where it's
based. However, the vendor has also grown its international smartphone sales,
particularly in the U.S. where its smartphones can be found under other
brands. Latin America is another source of significant smartphone growth for
the vendor. Despite impressive gains last quarter, brand equity may prove to
be an issue for ZTE in future. Strong brand recognition is a necessity if
high-growth smartphone sales abroad are a priority for the company.

Top Five Smartphone Vendors, Shipments, and Market Share, Q2 2012 (Units in
Millions)

          2Q12 Unit   2Q12 Market   2Q11 Unit   2Q11 Market   Year-over-
Vendor    Shipments   Share         Shipments   Share         year Change
Samsung   50.2        32.6%         18.4        17.0%         172.8%
Apple     26.0        16.9%         20.4        18.8%         27.5%
Nokia     10.2        6.6%          16.7        15.4%         -38.9%
HTC       8.8         5.7%          11.6        10.7%         -24.1%
ZTE       8.0         5.2%          2.0         1.8%          300.0%
Others    50.7        32.9%         39.2        36.2%         29.3%
                                                                           
Total     153.9       100.0%        108.3       100.0%        42.1%

Source: IDC Worldwide Mobile Phone Tracker, July 26, 2012

Note: Vendor shipments are branded shipments and exclude OEM sales for all
vendors.

In addition to the table above, a graphic showing the relative market shares
of the top 5 smartphone vendors over the previous five quarters is available
at IDC.com. The chart is intended for public use in online news articles and
social media. Instructions on how to embed this graphic can be found by
viewing this press release on IDC.com.

Top Five Total Mobile Phone Vendors, Shipments, and Market Share, Q2 2012
(Units in Millions)

                 2Q12 Unit   2Q12        2Q11 Unit   2Q11        Year-over-
                             Market                  Market
Vendor           Shipments   Share       Shipments   Share       year Change
Samsung          97.8        24.1%       75.4        18.8%       29.7%
Nokia            83.7        20.6%       88.5        22.0%       -5.4%
Apple            26.0        6.4%        20.4        5.1%        27.5%
ZTE              17.7        4.4%        16.3        4.1%        8.6%
LG Electronics   13.1        3.2%        24.8        6.2%        -47.2%
Others           167.7       41.3%       176.4       43.9%       -4.9%
                                                                              
Total            406.0       100.0%      401.8       100.0%      1.0%

Source: IDC Worldwide Mobile Phone Tracker, July 26, 2012

Note: Vendor shipments are branded shipments and exclude OEM sales for all
vendors.

For more information about IDC's Worldwide Quarterly Mobile Phone Tracker,
please contact Kathy Nagamine at 650-350-6423 or knagamine@idc.com.

About IDC

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and events for the information technology, telecommunications, and consumer
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Contact:

IDC
Kevin Restivo, 416-673-2230
krestivo@idc.com
or
Ramon T. Llamas, 508-935-4736
rllamas@idc.com
or
Michael Shirer, 508-935-4200
press@idc.com