Cell Phone Sales Hit Hard

Mobile phone makers shipped a whopping 35 million fewer devices in the first quarter of this year versus a year ago, according to figures just released by ABI Research.

And it’s a trend ABI doesn’t see letting up for the rest of the year.

“The industry and consumers have gone into protection mode,” Kevin Burden, ABI Research’s practice director, said in a statement. “Protecting profitability has led handset manufacturers to produce less and to operators and retail outlets holding smaller inventories.”

“Consumers are also realizing that many of the features they desire are already in the handset they currently use, and are willing to forgo an upgrade until they have more confidence in their own futures,” he added.

The news come at a time of frenzied competition in the smartphone market, which has generally been one of the few tech sectors to withstand the economic downturn.

Palm released its long-awaited Palm Pre last week and Apple (NASDAQ:AAPL) unveiled a new iPhone model, the iPhone 3G S, on Monday. And all the major handset makers are scrambling to match the success of the iPhone App Store, which has had over a billion downloads and boasts some 40,000 applications.

“It looks like phone manufacturers are stratifying the lines to meet new demands,” Maribel Lopez, founder and principal analyst Lopez Research, told
InternetNews.com. “Its all or nothing. Either a feature phone or the most basic thing possible.”

The first quarter typically sees a drop in mobile shipments from the fourth quarter which benefits from holiday sales. But ABI this drop was particularly sharp.

“The 255.6 million handsets shipped represented a 20 percent decline from Q4 2008, which was already a down quarter, and a nearly 12 percent decline from Q1 2008,” Burden said.

ABI said the biggest dip in year over year shipments was in the Latin American market which had a nearly 28 percent decline. The research firm attributed the drop largely to the devaluation of currencies in the region leading to higher prices of imported mobile phones.

A spot of encouragement

On a bright note, the Asia/Pacific region, with handset volumes triple that of the next largest region, was widely expected to take a big hit on shipments given the economic downturn. But ABI reported Asia Pacific posted only an 8 percent year-over-year decline, which it called “a spot of encouragement.”

Article courtesy of InternetNews.com.

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