Mobile Phone Sales on a Roll?

Sales of mobile phones broke records in the first quarter of 2005, with the likes of Motorola and Nokia enjoying the ride. But the period also put a strain on some of the smaller manufacturers.

According to the latest statistics from
Gartner, sales grew by 17 percent to a record total
of 180.6 million units on a year-over-year basis. The previous high came during the first quarter of 2004 when sales hit 153.7 million units.

As a result of the 2005 first-quarter total, Gartner has upped its forecast estimates for total 2005 sales from 720 million to 750 million units. The revised total represents a 13 percent increase over the 2004 total.

The big winners are Nokia, Motorola, Samsung and LG, all of which
grew their respective shares of the market.

Nokia remains the global
leader, with 30.4 percent market share in the first quarter this year, up from 28.8 percent the year before. Gartner noted that Nokia’s share grew despite its poor performance in North America.

“More phones are being sold, but profit margins are shrinking,” Ben Wood,
research vice president for mobile terminals research at Gartner, said in a
statement. “This is because consumers in emerging markets want cheap
handsets, and competition in more developed markets keeps prices low.

Motorola increased its share from 16.3 percent a year ago to 16.8 percent;
Samsung grew to 13.3 percent from 12.6 percent; and LG hit 6.2 percent up
from 5.3 percent a year ago.

The picture wasn’t rosy for everyone, though, with Siemens and Sony Ericsson losing market share. According to Gartner,
Siemens’ first-quarter 2005 result of 5.5 percent market share, down from 8 percent, was the lowest level reported for Siemens since 1999.

“Smaller manufacturers will feel the pressure, and many of them are already
struggling to stay profitable,” said Wood. “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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