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Motorola's Handset Inventory Builds—Survey
By: Reuters   |   Mar 03, 2007
Motorola, the world's No. 2 cellphone maker, shipped 65.7 million phones to distributors in the fourth quarter, but only 61 million were sold to consumers, market research group Gartner said.

Overall, mobile phone makers shipped close to 300 million phones to resellers in the fourth quarter, but more than 15 million had not yet been sold to consumers, Gartner said in its quarterly overview of handset sell-through sales to consumers.

Motorola's inventory build-up was blamed on the late introduction of its low-cost FONE handset in emerging markets and the fading popularity of its slim flip-phone RAZR in Europe.

Distribution takes longer in emerging markets, and the November launch of Motorola's FONE meant it had missed part of the year-end holiday gift season, Gartner analyst Carolina Milanesi said.

The FONE had also received a lukewarm response from consumers because it appeared too fancy for rural consumers, and because marketing to rural consumers turned off the appeal to fashion-conscious city slickers, she added.

"If we don't see inventory disappear in the first quarter for Motorola, it may cause a problem," Milanesi said.

Market leader Nokia also built some inventory, but these were within safety margins.

For the phone sector as a whole, inventories were not a source of concern, she said.

BenQ, the Taiwanese company which took over Siemens' handset business, slipped from the top six to No. 9. "I really struggle to see what they can do to turn that around," Milanesi said.

BenQ has filed for the insolvency of the German unit.

The smaller manufacturers, after the top six, shipped 16.3 percent of all phones in the fourth quarter to distributors but only 14.2 percent ended up in the hands of consumers, down from 19.2 percent a year earlier.

India was the world's fastest growing market last year, making Asia Pacific the world's biggest handset market with 301 million phones sold. Africa increased sales 32 percent to 60 million units in 2006.

All phone makers sold 990.9 million handsets to end users, while around 1.02 billion were shipped to distributors in 2006. Gartner expects consumers to buy some 1.1 billion cell phones in 2007.
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