Gartner: Mobile phone sales rose by 17 percent in Q1

Von Computing SA

The mobile phone industry had a record first quarter, with worldwide sales totalling 180.6 million units, a 17 percent increase from the first quarter of last year, according to Gartner.

The previous high for mobile phone sales was 153.7 million units in the first quarter of 2004. Gartner analysts said mobile phone sales grew in all regions.

"In the mature markets of Western Europe and North America replacement sales ensured a buoyant performance," says Ben Wood, research vice-president for mobile terminals research at Gartner.

"The Asia/Pacific region reflected seasonal trends by virtue of strong sales associated with the Chinese New Year and other festivals."

In addition, rapid growth in emerging markets, notably Eastern Europe, Middle East and Africa and Latin America, further bolstered global sales, he adds.

Nokia"s market share grew despite poor performance in North America. "The company did particularly well in Asia/Pacific, especially in mainland China, where aggressive pricing, significant investments in marketing and its distribution network delivered sales of more than 5.6 million units," says Ann Liang, Gartner"s principal analyst for mobile terminals in Asia-Pacific.

Motorola continued its strong performance with global mobile phone sales of 30.3 million units. Gartner analysts say the company"s success was based on a strengthening brand (built largely on the success of its RAZR V3 phone) and improved relationships with network operators.

"Motorola must now work hard in 2005 to grow its market share further without sacrificing margins too dramatically, particularly given its commitment to supply ultra low-tier products," Wood says.

Samsung increased its sales, doing especially well in Western Europe. Samsung also recorded strong sales in Russia, while price reductions helped it elsewhere in the region. Rival LG did well in North America thanks to sales of its code division multiple access (CDMA) phones.

Siemens had a difficult quarter, as its market share slipped to its lowest level since 1999.

"The uncertainty about the future of Siemens" business has hurt it, as network operators and key channels lose confidence in the company and its products," Wood says.

Based on the first quarter results, Gartner has increased its estimates for worldwide sales. Gartner now projects that worldwide mobile phone sales in 2005 will approach 750 million units, a 13 percent increase from 2004. Gartner had previously forecast sales of 720 million units.

"More phones are being sold, but profit margins are shrinking," Wood says.

"This is because consumers in emerging markets want cheap handsets, and competition in more-developed markets keeps prices low. Smaller manufacturers will feel the pressure, and many of them are already struggling to stay profitable. We expect some of them to be bought out, and a few will choose to leave the mobile phone market completely."