Handset Sales Falling as Credit Crunch Bites, says GfK

Consumers are cutting costs as sales of mobile handsets saw their first year-on-year fall since April 2007, GfK reports today. The total mobile handset market fell by 1.3% year-on-year in October as the credit crunch hit the mobile market. While basic phones have been hit hard, however, feature-rich phones continue to boom.
GfK reports a clear division in the telecoms market between basic phones, which are decreasing, and feature rich, Advanced Operating System phones, which are growing. Launches of very high profile feature-rich handsets like the Blackberry Bold, the T-Mobile G1 and the Sony Ericsson Xperia have had a huge impact on the Advanced Operating System market, which has grown at over 60% compared to the same period last year, says GfK. This is not enough to offset the market decline, however, as the Advanced Operating System segment represents only 15% of the total mobile handset, up from 9.2% in October 2007. 
While the total market is in decline, it is the contract handset market that is most affected, GfK says. The contract handset market fell by 13% year-on-year in October. In contrast, GfK says that contract SIM card sales have continued to grow over the same time period, now accounting for 16% of the total contract market.
The prepay market is also down for the first time since February 2007, with sales down by nearly 1% year-on-year. Looking at weekly sales, this trend appears to continue in November. In the second week of November, prepay sales were down by 9.6% year-on-year. Last year, GfK recorded sales starting to significantly increase around this period.
Consumers seem to be cautious with Christmas shopping and are waiting for the best deals to be launched, says GfKs David Evans. They are effectively delaying their purchases until closer to Christmas Eve. The handset market was down in the middle two weeks of November, fluctuating between 13% and 9% (down) compared to the same period last year. However, it looks like sales are now finally picking up on week 47 and only down by 4%.