Mobile phone sales decline

The demand for smartphones, however, continues to grow as the overall market shrinks.

By Benzinga Aug 14, 2012 12:07PM
By Louis Bedigian

Worldwide mobile phone sales declined 2.3% in the second quarter, according to a report released by Gartner (IT), presenting a new challenge for device manufacturers as they prepare for the fall shopping season.


Despite the decline, the tech industry still sold 419 million units during the period. According to Gartner, smartphone sales grew 42.7% and accounted for 36.7% of total mobile phone sales. This could prove to be a positive development for Apple (AAPL), which is expected to release its next-gen smartphone (presumably the iPhone 5) in September. Samsung may also unveil a new smartphone next month, though it is unknown whether the Galaxy Note II or some other unnamed device will be released.


Gartner attributes the decline to user anticipation for these new smartphones. With so much promise behind every product Apple plans to release, consumers lose interest in last year's models -- including the iPhone 4S or the original Galaxy Note. Why spend $200 on a new smartphone today if a newer and more exciting iteration is coming out tomorrow?


This logic both helps and hurts the smartphone industry. Without it, consumers might be more interested in buying devices that are already on store shelves. However, they also would be less likely to spend months anticipating the next best thing. Apple capitalizes on that anticipation, using it to ensure that long lines are produced whenever the company releases a new product.


Samsung has been using a similar technique to build its smartphone business, which recently topped sales of the iPhone by more than 20 million units. Both Apple and Samsung are expected to report positive news during the next quarter.


The same cannot be said for Nokia (NOK), which has all but lost the support of the nation's biggest cellular carrier, AT&T (T). Nokia recently announced it will sell off a number of assets, which could be another sign of the company's financial struggle. According to Gartner, Nokia's mobile phone sales declined 14.8% during the second quarter.


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