Mobile Phone Shipments Continue Robust Growth in the Second Quarter, According to IDC; Will 2006 Be a Billion Unit Year?

FRAMINGHAM, MA – JULY 20, 2006 – After an impressive first quarter, worldwide mobile phone shipments fell just short of an all-time high in the second quarter of 2006 with volume of 237.8 million units. The robust quarter was enough to boast a 2.1% increase from the first quarter, and 22.5% more than the same quarter one year ago. According to IDC's Worldwide Mobile Phone Tracker, 470.7 million units have shipped so far in 2006, which suggests that the industry may be close to shipping 1 billion units for the full year.

"The industry has been eyeing the milestone of 1 billion handsets shipped in a single year for some time, and many believe 2006 will be the year it happens. However, while the first half of the year has been impressive, IDC does not see this milestone being surpassed this year," said Ryan Reith, research analyst for IDC's Mobile Phone Tracker. "Although the demand for handsets in emerging markets continues to soar, the market's surging growth rate has been balanced by slowing demand in select mature markets."

While the majority of handset shipments were made up of entry-level devices, the second quarter also witnessed strong growth in handsets capable of utilizing bulked-up, third generation network infrastructure. With EV-DO and UMTS now common in the many regions throughout the world, 3G networks and services are becoming an increasingly significant part of the mobility world. The presence of established high-speed networks has resulted in the introduction of new handsets capable of video conferencing, internet access at broadband speeds, and real-time content sharing, all of which drove increased demand during the second quarter.

"With a number of carriers marketing subscription services that take advantage of 3G's advanced capabilities, all of the major vendors are now offering 3G-compatible devices across multiple regions," added Reith. "There has been much talk about 3G being a standard, but that could only become a reality when carriers were able to market services that were appealing to consumers. With competitive services in place to drive usage on mobile phones for applications beyond voice, handset vendors are putting an increasing amount of resources into 3G handsets. Nevertheless, lower-end devices still make up the majority of the market."

Vendor Highlights

— Nokia. The second quarter proved to be another impressive quarter for Nokia as they posted 4.3% growth from the previous quarter and a 28.9% increase from one year ago, with an industry-leading 78.4 million units shipped. So far in 2006, Nokia has enjoyed the success of both the E-series and N-series device lines. Several product announcements during Q2 show that the E-series and N-series have the longevity to drive Nokia as an industry leader for some time. The worldwide leader in 3G handset shipments has leveraged these high end lines to continue as the leader in the next-generation technology, while not losing site of the important role they play in supplying entry level devices in emerging markets.

— Motorola. The continued popularity of The RAZR produced another record quarter for Moto – the company's fifth straight – with 51.9 million handsets shipped. This was a sequential increase of 12.5% over 1Q06 and 53.1% growth from one year ago. The big surprise came from iDEN shipments, as Motorola announced a record quarter of shipments driven by new product releases in the first half of the year.

— Samsung. The Korean based company took a 9.4% quarter-over-quarter decrease in 2Q06, with the majority of the loss coming from the EMEA region. With a number of 3G UMTS handsets launching across multiple regions in the second quarter, the time required for consumer adoption took a toll on device shipments. Despite the decrease in shipments from last quarter, Samsung did increase shipments into Asia/Pacific and the Americas, and worldwide shipments were up 8.2% from a year ago.

— Sony Ericsson. The second quarter of 2006 proved to be a strong one for Sony Ericsson as it posted 33.1% year-over-year growth, passing LG Electronics to become the number 4 handset vendor worldwide. The company continued to build on the success of its Walkman-branded phones by launching a number of new devices, including the first UMTS Walkman phone (the W900), and announcing the W850, which will also be UMTS capable.

— LG Electronics. A 1.7% decrease from last quarter was felt primarily in LG's CDMA handset shipments. In North America, which has historically been a strong region for LG, shipments dropped from 6.5 million units in Q1 to 4.3 million units in Q2. On a positive note, LG shipments of WCDMA handsets went up 170.0% in Q2, and HSDPA handset shipments into Europe, coupled with newly announced plans to ship into the U.S., accounted for the company's growth. Worldwide shipments were up 26.4% year on year – slightly ahead of total market growth.

Top 5 Vendors, Worldwide Mobile Phone Shipments and Market Share

(Unit shipments are in millions)

Vendor Q2 2006 Unit Shipments Q2 2006 Market Share Q2 2005 Unit Shipments Q2 2005 Market Share Year- over- year change

Nokia 78.4 33.0% 60.8 31.3% 28.9%

Motorola 51.9 21.8% 33.9 17.5% 53.1%

Samsung 26.3 11.1% 24.3 12.5% 8.2%

Sony Ericsson 15.7 6.6% 11.8 6.1% 33.1%

LG Electronics 15.3 6.4% 12.1 6.2% 26.4%

Others 50.2 21.1% 51.2 26.4% -2.1%

Worldwide Total 237.8 100.0% 194.1 100.0% 22.5%

Source: IDC Worldwide Quarterly Mobile Phone Tracker, July 20 2006

Note: Vendor shipments are branded shipments and exclude OEM sales

for all vendors.

Mobile Phones – These small, battery-powered, voice-centric devices utilize operator-provided cellular/PCS air interfaces for voice communication. They are designed primarily, in both form factor and feature set, for a compelling mobile telephony experience, but may also include text-messaging capability. Mobile phones may include a headset jack for hands-free operation as well as a variety of features, such as personal information management, multimedia, games, or office applications. Mobile phones exist at all points along the form factor, price point, and feature set continua. Mobile phones that combine voice communications capabilities with pen or keypad handheld data features are tracked within the Converged Devices category.

For more information about IDC's Worldwide Quarterly Mobile Phone Tracker, please contact Kathy Nagamine at 650-350-6423 or knagamine@idc.com.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. Over 850 IDC analysts in 50 countries provide global, regional, and local expertise on technology and industry opportunities and trends. For more than 42 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com .

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