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Survey: Cheap models drive phones to new high

Nokia continued to strengthen its No 1 position last quarter.
Finland's Nokia continued to strengthen its No 1 position last quarter.

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AMSTERDAM, Netherlands (Reuters) -- Consumers around the world bought a total of 115 million mobile phones in the second quarter, putting the industry on a record path to sell between 450 and 460 million phones this year, a survey found on Tuesday.

Growth in emerging markets was the main reason why handset unit sales rose 11.9 percent year-on-year and two percent from the first quarter to a new high, despite the "unquestionable negative impact of the severe acute respiratory syndrome (SARS)," research group Gartner Dataquest said.

Demand in emerging markets was mostly for cheaper handsets. At the other end of the spectrum, sales also rose strongly in Japan as the first country in which consumers could buy handsets with very high-quality cameras built in.

"Sales in Japan, Latin America and the developing markets of central and eastern Europe and the Middle East and Africa far exceeded expectations during the quarter," Gartner said.

Could be record

Growth continued unabated in the first month of the third quarter, with India's Reliance Infocomm signing up a million customers in just 10 days in July, which could well be a world record, said Gartner analyst Ben Wood.

Year-over-year, Finland's Nokia, Japanese-Swedish joint venture Sony Ericsson and South Korea's LG and Samsung grew above average, but sales fell at Motorola and Germany's Siemens.

Gartner's 2003 forecast, implying growth of nine percent after three years of stagnation, is in line with that of most mobile phone producers as well as of rival research firm Strategy Analytics, which published second-quarter statistics last month.

The difference between the two is that Gartner measures sales from distributors to real users, while Strategy Analytics only measures sales from handset manufacturers to distributors.

Nokia could hit target

Compared with the first quarter, Nokia strengthened its No 1 position with a 35.9 percent market share from 35 percent in Q1. Economies of scale allowed it to cut prices for low-end products aggressively in emerging markets, Wood said.

Wood reiterated his expectation that Nokia could hit its 40 percent target later this year on the back of its new models, including handsets for Asian and American CDMA-standard networks, where until now it has trailed other vendors such as Samsung.

Motorola dropped to 14.6 percent from 14.7 percent in the first quarter, hurt by SARS and intense competition in the Chinese market where it used to be the largest vendor. Samsung fell to 9.9 percent from 10.5 percent due to SARS and lower handset subsidies.

Siemens declined to seven percent from 7.6 percent due to a lack of new models. Sony Ericsson rose to 5.5 percent from 4.8 percent as a result of new products in both Japan and Europe.

All vendors have vowed to grab market share in the all-important second half.



Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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