There’s good news for a beleaguered American handset giant named Motorola Inc.
The company’s Razr handset-beefed up on functionality and spun off in customized form in myriad colors for all four of the top-tier network operators-represented two of the top five bestselling handsets last quarter in the United States, according to new data from Strategy Analytics.
Perhaps inescapably, there’s sobering news as well.
Motorola, far ahead of other vendors in U.S. market share, lost four points of share here between the first and second quarters, dropping to 33% market share from 37%.
“The Razr has peaked in terms of volume creation,” said Chris Ambrosio, analyst at Strategy Analytics. “The company’s follow-on products are not generating the volume that the Razr generated at this time last year.”
Strategy Analytics data is an estimate of sell-through to consumers-in other words, retail sales-not the unit volume shipment numbers offered by the handset vendors, Ambrosio said. The firm has generated only two quarters’ of data so far on a new, survey-based approach. Annual growth or loss in market share would be a more accurate measure of a vendor’s direction, the analyst acknowledged. But, he said, Motorola’s basic market position is clear from the available data.
Motorola had nearly double the share of its next U.S. contender, Samsung Electronics Co. Ltd., which had 17% share in Q2. Motorola sold about 1.4 million Razr v3m handsets (CDMA2000 1x EV-DO) through Verizon Wireless-the top-seller in Q2-and a little over a million (EDGE-enabled) Razr v3s at AT&T Mobility and T-Mobile USA Inc.; the v3 was third on the best-seller list. LG Electronics Co. Ltd.’s VX8300, a well-promoted, $50 clamshell at Verizon Wireless, placed second.
Nokia notes
Nokia Corp.’s market movement popped out from the data, which is of interest because it is far and away the global leader in market share and is attempting to reassert its U.S. fortunes. For Nokia, the data also held good news and a sobering element.
Nokia, whose U.S. fortunes sagged between the fourth quarter of 2006 and the first quarter of this year, posted a 1.5% gain to give it a 13.4% share of the U.S. market in the second quarter, according to Strategy Analytics’ data. That would put it in a tightening, threeway competition for the slot behind market leader Motorola.
“It appears to us that Nokia has hit bottom on its U.S. market share and this upward blip in sell-through is an encouraging sign,” Ambrosio said. “We think Nokia’s gains came in entry-tier handsets at AT&T/Cingular.”
The analyst said that Nokia’s gain in entry-tier sales may have come at Motorola’s expense, as the Finnish vendor, with dominant global share, is in a position to cut prices to its carrier customers. Motorola, struggling with profitability, is not.
Nokia, however, has pursued the U.S. market by burnishing its brand image with “multimedia computing devices,” such as the N75 that launched earlier this year at AT&T Mobility. Success in the entry-tier market segment, while welcome to bolster share, may not burnish a brand still unfamiliar to a large swath of American consumers.
Details on market share
The U.S. market by share in the second quarter:
Motorola had 33% market share, Samsung had 17% (up .5% over Q1), LG had 15% (virtually no change over Q1) and Nokia had 13.4%. The next contender is a distant fifth place: Sanyo Corp. had 5.7% of the market, with Kyocera Wireless Corp. at 4% (up 1.4% over Q1) and Sony Ericsson Mobile Communications at 2.6%. Research In Motion Ltd. had 2.5% of the U.S. market, up .6%.
While Sony Ericsson lost a miniscule .2% market share between Q1 and Q2, which could be accounted for by many factors, Ambrosio said that the vendor would likely monitor subsequent quarterly results. Any losses could be explained in part by possible volume success by Apple Inc.’s iPhone at AT&T Mobility.
One surprise, according to the analyst: Sanyo’s fortunes at Sprint Nextel Corp.
“We got it wrong,” Ambrosio said. “We thought that the appearance of the Razr in Sprint’s portfolio would hurt Sanyo at Sprint. But the Sanyo Katana is selling well.”
The Katana was the fourth best-selling handset in the second quarter. Samsung’s SGHa707-aka the Sync-at AT&T Mobility was fifth.
More action to come: the fourth quarter, typically defined as the holiday season, provides 30% of U.S. annual sales.
Ambrosio said he expected more marketing efforts by the carriers to tout iPhone-like products that provide enhanced usability. The carriers will focus their subsidies on those products, the analyst predicted, to blunt AT&T Mobility’s Apple deal. According to the analyst, Korean and Taiwanese vendors’ competitive intelligence efforts have focused on touchscreen features for more than a year, thus they’ve had time to incorporate that functionality into handsets due on the market this fall.
