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Global mobile phone sales up 22 percent in Q305
Posted: 23-Nov-2005 [Source: Gartner]

[Gartner projects worldwide mobile handsets sales to reach 810 million units for the year.]

Egham, UK -- Worldwide mobile phone sales totaled 205.4 million units in the third quarter of 2005, a 22 percent increase from the same period last year, according to Gartner, Inc. This is the biggest quarter on record since Gartner started tracking the market on a quarterly basis in 2001. This combined with an expected strong fourth quarter, means Gartner has increased its worldwide mobile handset sales forecasts to reach 810 million units in 2005.

"Year on year sales grew in all regions as replacement sales in mature markets such as Western Europe and North America continued to drive growth while users in emerging markets joined mobile networks and acquired their first mobile device," said Carolina Milanesi, principal analyst for mobile terminals research at Gartner, based in Egham, UK.

In the third quarter of 2005, Nokia delivered another solid performance at a worldwide level with Western Europe and Asia Pacific making up for North America and Latin America, where sales were weaker. During the quarter, Nokia started shipping ten new devices, five for the Global System for Mobile Communications (GSM) markets and five for the code division multiple access (CDMA) market. Wideband-CDMA sales continued to show Nokia's strength in this market with the Nokia 6680 being the most widely offered handset among operators, including Vodafone KK that recently added it to its portfolio in Japan.

Motorola experienced the largest market share increase among the top five vendors (see Table 1) in the third quarter of 2005 and widened the gap with Samsung. Motorola did well with sales of the RAZR phone, with 12 million units sold by the end of September. With prices falling and additional colors introduced, this phone has grown in popularity and raised Motorola's profile in the market. Despite offering close to a dozen wideband-CDMA models, Motorola has been suffering in this area as overall sales have not matched expectations but also as competitors such as Nokia and Samsung started to focus more on this market.

Samsung remained in the third position, with 25.7 million of phones sold, and its market share totaled 12.5 percent, however it lost ground to Motorola as the company suffered from inventory build up this quarter and continued not to address the emerging markets as aggressively as Motorola and Nokia have.

In Western Europe, sales reached nearly 40 million units mainly due to replacement sales. "Users in this region continue to be attracted by new models coming onto the market, and vendors shipped quite a few new products in the third quarter. Operators in Germany and Italy recorded an excellent quarter with the addition of more than one million new subscribers in a single quarter," Ms. Milanesi said.

In the Eastern Europe, the Middle East and Africa region sales of mobile devices almost matched Western Europe with 39.7 million units - a 40 percent increase over the same period last year. Russia, Ukraine, Poland, South Africa, Nigeria and Turkey were the driving markets behind the regional growth.

The North American market grew slightly to 36.3 million units, which is the strongest third quarter for this region and the second strongest quarter on record. "Despite a slow down in new subscribers' growth, the mobile device market grew sequentially by over 800,000 units thanks to sales coming from an increase in churn," said Hugues De La Vergne, principal analyst for mobile terminals research at Gartner, based in Dallas, Texas.

In Latin America, 26.1 million mobile phones were sold in the third quarter, 46 percent up from the same period last year. Although Brazil continued to contribute more than one-third of total regional volumes, sales were significantly less compared to the second quarter as mobile operators failed to keep up the same rate of new subscribers' acquisition.

In Asia/Pacific, mobile terminals sales reached 52.2 million units in the third quarter, a 27 percent increase over the same period last year. All countries in the region experienced healthy growth, especially in India and China. "In China, the built up to the Golden Week Holiday, which falls on the first week in October, helped to boost sales at the very end of the quarter," said Ann Liang, principal analyst for mobile terminals research at Gartner, based in Taiwan. "Lower-tier phones aggressively priced by operators attracted new users in high growth third- and fourth-tier cities."

In Japan, terminal sales were 11.3 million units in the third quarter, a slight increase of 0.6 percent from the third quarter of 2004. Sales of WCDMA handsets overtook sales of Personal Digital cellular (PDC) handsets for the first time in Japan, and PDC sales accounted for 42.8 percent of total sales in the country. "While seeking a new killer function, operators and vendors tried to spread their portfolios to meet varied user needs," said Nahoko Mitsuyama, principal analyst for mobile communications for Gartner, based in Tokyo, Japan. "Consequently, the number of models available in the market increased almost 30 percent on a year-on-year basis." "Sell in could be as high as 820 million of units if the supply chain is able to satisfy the demand," Ms Milanesi said. Gartner predicts a build up in inventory which will affect 3G mobile phones in particular as mobile operators especially in Western Europe will fail to convince consumers that Christmas this year will be a 3G Christmas.

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