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Market analysis

In the worldwide mobile phone market (inclusive of smartphones), vendors shipped 448.6mn units, up 3.9% from the 431.8mn units shipped Q1'13, but down 9.0% from the 492.8mn units shipped in Q4’13. Smartphones accounted for 62.7% of all mobile phone shipments in Q1’14, up from 50.7% of all mobile phone shipments in Q1’13.1

The worldwide smartphone market began the year with an expected downturn from holiday quarter shipment volumes, but still posted a YoY increase in Q1’14. According to Worldwide Quarterly Mobile Phone Tracker, vendors shipped a total of 281.5mn smartphones worldwide, up 28.6% from the 218.8mn units in Q1’13, but down 2.8% from the 289.6mn units shipped in Q4’13. Total smartphone shipment volume is expected to reach 1.2bn units in 2014, up 19.3% YoY from the 1.0bn units shipped in 2013.1

Ongoing improvements in infrastructure have driven the continuing uptake of mobility and broadband around the world and in 2014 mobile broadband is the fastest growth area overall for the global telecoms sector. But increased usage has caused data traffic jams on the 3G networks because this infrastructure cannot cope with the rapid increase in traffic over the last couple of years. The release of 4G/LTE mobile broadband is expected to ease the issue in the short term and anticipation of this growing demand has resulted in LTE becoming the fastest developing mobile technology. The interest in the voice-over LTE (VoLTE) market is expected to accelerate as LTE networks become more mass market. Cellular operators in the US have gone to great lengths to expand LTE availability across the country. As a result, the US will become a key market for VoLTE services in coming years, with operators and consumers alike benefiting from the scale of LTE and LTE-A network footprints.

Cisco's announcement of its Inter-Cloud partnerships with several major cloud service providers is based on differentiated Infrastructure-as-a-Service (IaaS)—differentiated by way of linkage of the Cisco technology layers (hardware and software) to provide a network service that aims to be the most efficient in terms of cost and flexibility in reacting to different workload demands. This latest trend of server virtualization has led to a change in the demand pattern of hardware based servers.1 Primary focus for Inter-Cloud is supporting the Internet of Everything (IoE). Cisco and AGT International announced a Smart City Global Strategic Alliance that plans to deliver the promise of the IoE through edge analytics and cloud technologies that will change the way cities are managed and safeguarded.

Ericsson sales decreased 9.6% YoY and 29% sequentially. The YoY sales decrease was primarily driven by North America and Japan where large mobile broadband coverage projects peaked in the first half of 2013. Intellectual Property Rights revenues grew YoY following the new Samsung license agreement on cellular technologies reached in January 2014. Sales declined sequentially following a strong Q4, with significant decline in China. Gross margin increased YoY due to a large share of mobile broadband capacity projects with higher hardware margins.

Motorola Solution’s net sales were US$1.8bn in Q1’14 , down US$172mn, or 9%, compared to net sales of US$2.0bn last year . The decrease in net sales reflects a US$145mn decrease in the Government segment driven by declines in North America, Latin America and APME, and a US$27mn, or 4% decrease in net sales in the Enterprise segment driven by declines in North America, Latin America and APME. Gross margin was US$845mn, or 46.9% of net sales, also a decline from Q1’13 (48.4%).

  1. IDC.com press release, April 2014
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Scott Adams
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