Mobile phone sales reached new records in first quarter

A record number of mobile phones were sold in the first quarter, with Nokia retaining the largest share of the market.

Mobile phone sales hit a new high in the first three months of the year, while the top three manufacturers tightened their grip on the market, according to a study published Wednesday.

Mobile phone manufacturers sold 180.6 million phones between Jan. 1 and March 31, an increase of 17 percent over the 153.7 million sold in the first three months of last year, according to market analysts at Gartner Inc. The top three manufacturers now control over 60 percent of the market, compared to 57.7 percent a year earlier.

Nokia sold 54.9 million phones in the quarter, 10.7 million more than a year earlier, giving it a 30.4 percent share of the market, up from 28.8 percent a year earlier, according to the study. Nokia sold over one-tenth of its phones in China, a success which Gartner attributed to significant investments in marketing and distribution networks there.

Motorola sold 30.3 million phones, boosting its share of the market to 16.8 percent from 16.3 percent in the first quarter of 2004. Samsung Electronics' share climbed to 13.3 percent, and that of LG Electronics to 6.2 percent.

These gains were at the expense of Siemens, which saw its share of the worldwide mobile phone market slip to 5.5 percent from 8 percent a year earlier. The company was the only one to sell fewer phones this year than last: 9.9 million in the quarter, compared to 12.3 million a year earlier. The decline is a sign that network operators and other distributors are losing confidence in Siemens and its products, Gartner said. Last year, Siemens warned of a safety problem with some of its phones, which could cause hearing damage in certain circumstances.

Sony Ericsson Mobile Communications slipped back one place in the rankings, although its market share remained almost unchanged at 5.5 percent, down from 5.6 percent.

Although the market is growing, profit margins are shrinking, and lower margins could drive lower-volume manufacturers to abandon the market, Gartner said. That's already happening. Alcatel has sold its mobile phone business, and Siemens has announced it is looking for a buyer for its handset division.

Heartened by the strong first-quarter sales, Gartner now predicts 750 million mobile phones will be sold worldwide this year, 13 percent more than last year. Previously, it had estimated sales would total 720 million for the year.

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