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Motorola Slips in Worldwide Sales

Motorola lost some ground in mobile phone market share due to aggressive pricing by competitors and economic pressures, a new report claims.

Gartner's market analysis for mobile handset makers, released today, now rates Motorola (NYSE: MOT) in fourth place behind Nokia, Samsung and Sony Ericsson in global sales.

Motorola now holds an 8 percent share of the market. Nokia holds 38.2 percent, Samsung holds 17.1 percent and Sony Ericsson is just ahead of Motorola with 8.1 percent market share.

"The economic environment is particularly difficult for Motorola because of its lack of compelling products and competitors' aggressive pricing called for price adjustments that Motorola cannot afford," said Carolina Milanesi, the Gartner analyst who wrote the report. "We expect Motorola's issues to continue well into 2009."

The news comes on the eve of the U.S. holiday shopping season launching amid a sluggish economy. The market challenges have plagued Motorola for a good part of the year. The beleaguered handset maker announced layoffs, pushed back the spin-off date of its mobile device unit and has undertaken a major mobile OS revamp effort.

Despite Motorola's slide, sales of mobile phones hit more than 309 million units for the third quarter of this year, a six percent jump compared to the third quarter of 2007, Gartner's report said.

The North American market continues to grow, with 47 million units sold in the third quarter, representing a 4.5 percent increase over the third quarter 2007. Gartner attributes the spike to the increasing popularity of the Apple iPhone 3G and Research in Motion's expanded smartphone portfolio. Apple is currently in seventh place and RIM is in sixth place in overall global market unit sales.

Gartner predicts an 8 percent growth in the global market in 2008, but stated 2009 will be a challenging one for all handset makers.

"We expect the market to remain challenging for the first half of 2009 and we expect a drop in sales between 1 and 4 percent," Milanesi said.

In stark contrast, Nokia is in the best position to deal with current market conditions, said Gartner. The leader, which sold 188 million phones in the third quarter and holds 38.2 market share, is expected to gain more share as new devices hit the market during holiday season.

Samsung, which experienced a 26.3 percent increase in sales in the third quarter compared to 2007 third quarter, is benefiting from an enriched mid-tier device product line. It sold 52.8 million devices in the third quarter and holds 17.1 percent market share.

"It's continued to take advantage of the popularity of its touch screen devices," said Milanesi, describing Samsung as well positioned for the rest of 2008.