Mobile Phone Market Declines 11.9% In 1QMobile Phone Market Declines 11.9% In 1Q

The mobile phone industry saw a sluggish first quarter because of fears over the global economic recession and seasonal sales trends, according to a new report by ABI Research.

The first quarter typically sees fewer sales than the previous quarter because manufacturers like to release high-profile handsets before the holiday shopping season. But this first quarter had an especially sharp drop, as the industry shipped 35 million fewer units than it did during the same period last year, ABI said.

"The industry and consumers have gone into protection mode," ABI Research director Kevin Burden said in a statement. "Protecting profitability has led handset manufacturers to produce less and operators and retail outlets [to hold] smaller inventories. Consumers are also realizing that many of the features they desire are already in the handset they currently use, and are willing to forgo an upgrade until they have more confidence in their own futures."

ABI said all indications point to global shipments being lower than last year, which is in line with recent predictions by Samsung and Nokia. Companies such as Motorola and Sony Ericsson are already struggling in the highly competitive field, and the decline in shipments will likely lead to some tough business months ahead.

One bright spot is the smartphone segment, which is expected to defy the recession. Nokia released its touch-screen N97 this month, and the handset is expected to be a global best-seller. Palm has launched the long-awaited Pre, only to be one-upped by Apple announcing the iPhone 3G S and a discounted iPhone 3G on Monday.

Most companies are just starting the hard work of mobilizing workforces by bringing the software they use to smartphones. information analyzed this issue in an independent report, and it can be downloaded here (registration required).