Mobile handset sales jump in Q2

Changing fashions and maturing markets continued to drive mobile phone sales in the second quarter of the year, pushing worldwide unit sales up 12 percent over the year-ago period, according to market researcher Gartner Inc.

Worldwide mobile phone unit sales amounted to 114.9 million units during the second quarter, 2 percent higher than the previous quarter, Gartner said in a report released Tuesday. Unit sales also grew year-over-year in the first quarter. The two consecutive quarters of year-over-year growth are a laudable achievement, Gartner said, given that the market had stagnated over the past couple of years.

Additionally, the industry managed increased unit sales during the quarter despite the outbreak of severe acute respiratory syndrome (SARS) in the Asia-Pacific region, the researcher noted.

Sales in Japan, Latin America and the developing markets of Central and Eastern Europe, the Middle East and Africa showed strong growth, Gartner said, exceeding the researcher’s expectations.

More mature markets in Europe also fuelled sales with their demand for more expensive and feature-rich upgrades, Gartner added.

“We are in a replacement cycle in North America and Western Europe,” said Ben Wood, principal analyst of mobile terminals at Gartner.

“It’s definitely about fashion (in North America and western Europe). People who bought phones at the end of 2001 and in 2002 find that they look a bit big and old and they are now being barraged with new phones with games, cameras and color,” he said.

Finnish handset maker Nokia Corp. continued to lead the pack in terms of units sold, taking 35.9 percent of the market for the second quarter, up from 34.2 percent during the same period last year. Nokia was aided by heightened demand in emerging markets and its success with CDMA (Code Division Multiple Access) handsets, Gartner said.

Though Nokia leads the GSM (Global System for Mobile Communications) market, by producing CDMA handsets the company can offer consumers more choices and compete with other CDMA providers, Wood said. Indeed, Nokia announced in April that it would begin producing CDMA phones in China in an effort to drum up more sales in the country, although it has not said when production will begin.

China spelled trouble for number-two manufacturer Motorola Inc. during the quarter, however, as it lost share due to the SARS outbreak, Gartner said. Motorola’s market share of unit sales fell from 17 percent in the second quarter of 2002 to 14.6 percent in this year’s second quarter.

Motorola is the leading manufacturer in China, but when SARS hit in April and May people abruptly stopped shopping, Wood said, and handset production quickly outpaced demand. It will take a while to distribute the excess handsets, he noted.

Meanwhile, Samsung Electronics Co. Ltd came in third with 9.9 percent of worldwide unit sales, while Siemens AG took 7 percent during the second quarter. Sony Ericsson Mobile Communications AB landed with 5.5 percent of unit sales.

Looking ahead, Wood predicted that the mobile handset market would continue to post strong growth and that competition would heat up even further.

“The second half of this year will be the most competitive market landscape we’ve seen in terms of the number of products and pricing,” Wood said.

He added that the fourth-quarter holiday season would result in the biggest sales boom. Gartner predicts that for the full-year 2003 worldwide mobile handset unit sales will reach 450 million.