[Mobile phone sales for 2005 increase 21% over previous year with leading vendors increasing market share over smaller vendors says Gartner in its latest report.]

Egham, U.K. -- Worldwide mobile phone sales totaled 816.6 million units in 2005, a 21 percent increase from 2004, as the leading six vendors increased their share of the market at the detriment of smaller vendors, according to Gartner, Inc.

The top six vendors accounted for 79.4 percent of worldwide mobile phone sales in 2005. These leaders experienced a steady increase in market share throughout the year, as their market share increased from 78 percent in the first quarter to 84 percent in the fourth quarter of 2005.

"As competition continues to drive price pressure in the low-end, and a design and technology "arms race" in the high-end, the survival of the fittest depends more and more on economies of scales, or very carefully cut out niche markets," said Carolina Milanesi, principal analyst for mobile terminals research at Gartner, based in Egham, UK.

In the fourth quarter of 2005, the mobile phone market remained strong with sales exceeding 235 million units. This is yet again the biggest quarter on record since Gartner started tracking the market on a quarterly basis in 2001. "The industry experienced record sales due to continued strong growth in emerging markets, where falling prices for cellular connectivity (phones and subscriptions) resulted in higher-than-expected sales. In more mature markets, such as Western Europe and North America, replacement sales were driven by users that gave into the charm of highly fashionable devices," Ms. Milanesi said.

Worldwide Mobile Terminal Sales to End-Users in 4Q05 (Thousands of Units)

Nokia 4Q05 Sales 82,218.3, 4Q05 % 35.0

Motorola 4Q05 Sales 41,884.0, 4Q05 % 17.8

Samsung 4Q05 Sales 28,385.4, 4Q05 % 12.1

LG 4Q05 Sales 16,875.0, 4Q05 % 7.2

Sony Ericsson 4Q05 Sales 16,118.7, 4Q05 % 6.9

BenQMobile 4Q05 Sales 11,101.7, 4Q05 % 4.7

Others 4Q05 Sales 38,546.6, 4Q05 % 16.3

Source: Gartner Dataquest (February 2006)

Nokia remained the worldwide leader with 32.5 percent of all mobile phone sales in 2005. It now has a market share that is more than double that of its nearest competitor in Europe and Asia, and more than three times its nearest competitor in Eastern Europe, the Middle East and Africa. After a difficult 2004, Nokia bounced back bringing to market successful products like the 6680, highly stylish products such as the 8800 and it took the lead in the Wideband Code Division Multiple Access (WCDMA) market with products such as the n70. "To illustrate Nokia's performance, more than one third of the world's phone users bought a Nokia phone in the fourth quarter of 2005," said Ms. Milanesi.

With sales just under 42 million units in the fourth quarter of 2005, Motorola retained the number two spot in Western Europe and at a world-wide level. It remained the preferred brand in North America and displaced Samsung from the number two spot in Asia Pacific. In 2005, "thin" was definitively better for Motorola that recorded the largest market share growth among the top manufacturers in 2005.

Samsung remained in the third position in the fourth quarter of 2005 with sales totaling 28.4 million units. For 2005 its market share remained static at 12.7 percent, with only a 0.1 percentage point gained from 2004, widening the gap with Motorola. This is mainly due to Samsung favoring margins over market share and the decision not to enter the price war in the emerging markets.

Worldwide Mobile Terminal Sales to End-Users in 2005 (Thousands of Units)

Nokia 265,614.8, 32.5%

Motorola 144,920.4, 17.7%

Samsung 103,753.6, 12.7%

LG 54,924.6, 6.7%

Sony Ericsson 51,773.8, 6.3%

Siemens 28,590.6, 3.5%

Others 166,985.1, 20.6%

Total 816,562.9, 100.0%

Fourth quarter results are included with BenQ Mobile due to the company's acquisition of Siemens Source: Gartner Dataquest (February 2006)

Regional Analysis

In Western Europe, sales of mobile phones totaled 49.1 million units in the fourth quarter of 2005 and 164 million units in 2005. Consumers took advantage of Christmas promotions and upgraded their phones to newer and trendier phones. "The trend in the fourth quarter was all about fashion, with phones such as the Motorola pink razr v3 and the Siemens CL75 Poppy capturing consumers' interest," Ms. Milanesi said. "In countries such as the UK, people were even prepared to subscribe to a new contract before their existing contract ended in order to acquire the pink razr phone."

The same trend of upgrading to trendier phones occurred in the more mature markets in Central Eastern Europe, the Middle East and Africa (CEMEA), as first time subscribers continued to join networks and mobile phone sales for the year reached 153.5 million units. Gartner analysts expect the region's growth in 2006 to be fuelled by increased replacement sales in Eastern Europe and the Middle East, but mainly by new subscriber growth in Africa.

In North America, the fourth quarter was a record quarter with mobile phone sales reaching 41.3 million units. In 2005, sales reached 148.4 million units. "Consumers continued to upgrade their phones with camera devices and unique form factors such as the Motorola razr V3," said Hugues De La Vergne, principal analyst for mobile terminals research at Gartner, based in Dallas, Texas. "The region also experienced strong growth in the prepaid phone segment."

Sales of mobile phones in Latin America reached nearly 102 million units in 2005, a 40 percent increase from 2004. "However, the explosive growth experienced over the past few quarters is slowing," said Tuong Nguyen, analyst for mobile terminals research at Gartner, based in Arlington, Virginia. "We expect year on year growth in the region in 2006 to be in the high single-digits."

In Asia/Pacific, mobile phone sales reached 56.4 million units in the fourth quarter of 2005 and 204 million units in 2005. Sales in the region were fuelled by key markets such as China and India. "In China, sales were driven by strong growth in Global System for Mobile Communications (GSM), while in India, subscriber additions in November and December exceeded all previous performances," said Ann Liang, principal analyst for mobile terminals research at Gartner, based in Taiwan.

Mobile phone sales in Japan totaled 11.7 million units in the fourth quarter of 2005, and totaled 45 million units for the year. Music player functionality fuelled replacement sales especially by young users.

Looking ahead to results for the first quarter of 2006 Ms Milanesi said, "Chinese New Year, prolonged Christmas and New Year sales promotions in Western Europe and North America, as well as continued growth in emerging markets, will all contribute to strong sales in the first quarter of 2006. Based on preliminary data for the first two months we expect to see a similar trend as in the first quarter of 2005 with a drop over the previous quarter in the region of five to eight percent." More information is available in the Gartner report "Market Share: Mobile Terminals, Worldwide, 4Q05 and 2005".

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