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Mobile Phone Sales Rose 17 Percent Q1 2005
Posted: 25-May-2005 [Source: Gartner]

[Gartner reports mobile phone sales growth in all regions.]

Egham, UK -- The mobile phone industry had a record first quarter with worldwide sales totaling 180.6 million units, a 17 percent increase from the first quarter of 2004, according to Gartner, Inc. 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," said 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 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 said.

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," said Ann Liang, principal analyst for mobile terminals in Asia Pacific at Gartner.

Motorola continued its strong performance with global mobile phone sales of 30.3 million units. Gartner analysts said 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," Mr. Wood said.

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," Mr. Wood said.

Based on the first quarter results, Gartner has increased its estimates for worldwide sales. Gartner now projects 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," Mr. Wood said. "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."

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