­Worldwide sales of mobile phones to end-users reached more than 309 million units in the third quarter of 2008, a 6 per cent increase compared to the third quarter of 2007, according to Gartner. Growth dipped back into single figures, representing less than half the 16 per cent growth rate of the same period in 2007.

“The global economic downturn has triggered a three-way battle between Sony Ericsson, Motorola and LG for the third position in the worldwide mobile phone market, which has seen Sony Ericsson emerge as the winner in the third quarter of 2008,” said Carolina Milanesi, research director for mobile devices at Gartner, based in Egham, UK. “It has also affected sales in both mature and emerging markets during the quarter. Replacement sales in particular were affected, while first time users continued to see the value of acquiring a mobile phone.”

Nokia sold 118 million phones in the third quarter of 2008. It was the first quarter of the year in which Nokia felt the negative effects of the current economic climate. Lower replacement sales in mature and emerging markets impacted Nokia’s overall sales in the third quarter. Nokia suffered in what it called the “converged devices” segment. However, analysts said Nokia should be able to marginally improve its share in the fourth quarter of 2008 as its new devices come to market, and the holiday season helps to increase overall sales. Nokia remains best-positioned to deal with the current market conditions because of its economies of scale.

Samsung had a very strong third quarter as sales increased 26.3 per cent over the same period in 2007. It continued to take advantage of the popularity of its touch-screen devices - the Tocco and Omnia - as well as an enriched mid-tier device portfolio. Despite delivering a strong sell-in, the vendor was also able to burn inventory from the previous quarter. “Samsung is well positioned for the rest of 2008,” said Ms Milanesi. “Although high-end products are under a lot of pressure, Samsung’s advantage is that its products appear to offer better value for money than its competitors.”

Worldwide Mobile Terminal Sales to End-Users in 3Q08 (Thousands of Units)

 Note* This table includes iDEN shipments, but excludes ODM to OEM shipments. Source: Gartner (November 2008)

Sony Ericsson’s rise to the third position during the third quarter of 2008 had more to do with the issues that Motorola and LG faced than Sony Ericsson’s ability to turn around its business after a few difficult quarters. Sony Ericsson continued to suffer from the weakness in the high-end markets as well as the slowdown in replacement cycles in Europe. Despite an aggressive price strategy in Europe, the Middle East and Africa (EMEA), Sony Ericsson built some inventory in Asia/Pacific during the quarter, which left a much smaller gap between it and Motorola on sell-in numbers. There have been reports of component shortages for the Xperia X1, Sony Ericsson's long-waited Windows-Mobile-based touch-screen device, so sales are likely to be challenged again. In addition, new products such as the Walkman W705 add to an already crowded music portfolio and might not be enough to win more customers.