The most ferocious battle in the worldwide cellphone market right now is for second, not first place, as Samsung Electronics Co. Ltd. closes in on a stumbling Motorola Inc.
The latest evidence came yesterday from research firm Gartner Inc. With 14.6 per cent market share, Motorola was just 1.2 percentage points ahead of Samsung in second-quarter sales to end users.
In contrast, front-runner Nokia Corp. was way out in front, expanding its share to 36.9 per cent, Gartner said.
The tight race between Motorola and Samsung is as much about one player losing momentum as it is about the other gaining steam.
Motorola
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To begin with, newer, cooler wireless devices such as the iPhone have dethroned Motorola's smash hit, the skinny Razr flip phone. "Motorola hasn't had a homerun type product since the Razr," said Gartner analyst Hugues De La Vergne.
As for Samsung, observers believe it has made inroads by taking the latest and greatest from its technology-crazed home market of South Korea and bringing it to the rest of the world. Samsung is trying to position itself as "one of the cutting edge vendors in the market," Mr. De La Vergne said.
While cellphones are a fast-growing market - Gartner figures second-quarter sales rose 17.4 per cent - handset makers can't relax because competition is intense. They need to reach out to the millions of new wireless customers in emerging nations, while trying to polish their brand and gain share in more mature Western markets.
Achieving that mix isn't easy. While text messaging may be popular in one country, cellphone users in another market will have moved on to more advanced wireless services.
"You fight over every inch, you fight over every unit, you fight over every operator, you fight in every market," said Shiv Bakhshi, director of mobility at research firm IDC.
That has been the case with Samsung and its U.S.-based rival Motorola for some time. Back in 2004, Nokia had 30.7 per cent share, followed by Motorola at 15.4 per cent and Samsung at 12.6 per cent.
In earlier years, Motorola ruled the wireless market. It introduced the world's first portable cellphone dubbed the DynaTAC 8000X, better known as the "brick phone," in 1983. But in ensuing years, Finland's Nokia snatched its crown.
The 2004 launch of the Razr gave Motorola a taste of its past glory as consumers started snapping up the product. By the second quarter of 2006, Motorola's market share jumped to 21.9 per cent, according to Gartner.
But concerns emerged later that year. A typical cellphone stays on store shelves about a year. Even though the Razr was still in demand two years after its introduction, analysts could see a day when it would fall out of favour, and they didn't see its replacement. In the first quarter of 2007, Motorola's market share started to slip.
"When Motorola stumbles as hard as it did over the last two to three quarters, it creates a huge opportunity because the Samsung guys were on an upward momentum," Mr. Bakhshi said.
According to a report issued by Mr. Bakhshi earlier this month, Samsung actually shipped more cellphones than Motorola in the second quarter. (Unlike Gartner, IDC doesn't track how many ended up in end users' hands.)
Samsung is pushing beyond Asia into other markets. While it doesn't have an iconic cellphone like the Razr, it has steadily rolled out a number of new products, such as the BlackJack (a rival to the BlackBerry), a line of slim models called the Ultra Edition, and the UpStage, which has a phone on one side and an MP3 player on the other.
"They have the advantage that the South Korean market is one of the most advanced cellphone markets in the world, so they've brought a lot of those innovations and features into the U.S. market," said Allen Nogee, an analyst at research firm In-Stat.
Nevertheless, Samsung could make more of a mark on the industry if it created a star cellphone. "Having a truly iconic product would really help Samsung from a brand and market share perspective," Mr. De La Vergne said.
