Another quarter ended with Research in Motion missing from IDC’s ranking of Top 5 worldwide mobile phone makers as the Canadian manufacturer continues to face growing competition, much of it from lesser-known companies that put more emphasis on smartphones than ordinary cell phones.
The continuing troubles of RIM in the first quarter are troubling to analysts and investors alike because it had held such a strong position in the smartphone business for years.
The company’s market share has been declining over the past year due to increased competition from Apple’s iPhone and various Android smartphones, including those made by ZTE, which IDC ranked fifth in global mobile phone market share during the quarter.
ZTE, based in Shenzhen, China, is not yet well known to Americans, but plans to increase brand awareness in the U.S. as part of a concerted effort to ship more smartphones and low-cost feature phones to users interested in limited features like texting, IDC said.
ZTE finished the first quarter with 4 per cent of the mobile phone market, behind Apple with 5 per cent, LG Electronics with 6.6 per cent, Samsung with 18.8 per cent and top seller Nokia with 29.2 per cent.
IDC said 372 million smartphones and feature cell phones shipped globally in the first quarter, up nearly 20 per cent from the 310 million shipped in the first quarter of 2010.
Yesterday, RIM warned that its first quarter earnings will be lower than expected due mainly to its expectation that smartphone sales were on the low end of its projection that 13.5 million to 14.5 million ship during the period.
RIM’s stock price has declined by 10 per cent since the warning was made.
Mike Abramsky, an analyst at RBC DominionSecurities, Friday downgraded RIM’s stock from “top pick” to “sector perform,” citing expected smartphone sales slowdowns in the U.S. and Latin America. “Coming just four weeks after providing soft Q1 guidance, this warning raises questions over RIM’s visibility into its own business,” Ambramsky wrote.
Abramsky said that he’s also concerned about RIM’s warning of smartphone launch delays later in 2011 and of the “less-than-favorable debut” of the the company’s PlayBook tablet on April 19.
RIM was last in the top five mobile phone market share ranking in the second quarter of 2010, when it finished fifth. It had finished fourth in mobile phone shipments globally in the first quarter of 2010, according to Ramon Llamas, an IDC analyst.
“We all wonder what’s up with RIM,” Llamas said.
Overall, RIM is still selling more smartphones than a year ago, but has slipped in rank due to the pressures from ZTE and other phone makers like Micromax, TCL-Alcatel, and Huawei, IDC said.
Because RIM didn’t finish in the top five, its first quarter mobile phone shipment numbers were not published by IDC.
“Several notable vendors, including feature phone makers, outpaced the overall market, which contributed to share losses of some top suppliers,” said Kevin Restivo, another IDC analyst.
Even though Apple sells only smartphones, it maintained its position in the fourth place spot in overall phone sales globally thanks to another record sales quarter. Apple was buoyed by strong iPhone sales on Verizon Wireless in the U.S. and because its iPhone works on the networks of 186 carriers in 90 countries.
LG, ranked third, was the only maker in the top five to see a decline in sales compared to the first quarter of 2010. IDC said that LG hopes that increasing sales of its smartphone, such as the upcoming LTE-ready Revolution that will run on Verizon, will help it overcome declines in sales of its feature phones.
Second-place Samsung had a record quarter, and is increasing its shipments of smartphones, which now make up 20 per cent of all its phones, IDC said.
Nokia held a commanding lead, with slightly improved shipments compared to last year. About 23 per cent of Nokia’s total mobile phone shipments are now smartphones, IDC said, adding that it will closely watch the Finnish manufacturer as it turns to Microsoft Windows Phone as its primary smartphone OS.
“What remains to be seen is how quickly Nokia will introduce new phones as competition intensifies,” IDC said.
IDC said that overall worldwide smartphone growth lifted the mobile phone market to a new high in first-quarter sales. “Increasingly, mobile phone makers and carriers are making smartphones affordable to a wider variety of people, which has helped drive the market to new heights,” IDC said.
“Feature phones have represented the majority of the mobile phone shipments, but still are under tremendous pressure from smartphones,” Llamas said. “Even popular quick-messaging devices, once a bright spot within the feature phone market, appear to be losing steam as smartphones gain popularity.”