Dataquest: Mobile-phone sales fall for the first time

Mobile-phone sales fell 3.2 percent last year, the first-ever decline in an industry that saw a compound annual growth rate of close to 60 percent between 1996 and 2000, according to a survey released Monday.

Nearly 399.6 million mobile phones were sold in 2001, compared with over 412.7 million in 2000, according to San Jose, California-based Dataquest Inc., a unit of Gartner Inc.

Handset makers faced a tougher market, especially in Europe and Latin America, as mobile-phone operators cut subsidies on handsets and started selling subscriptions and prepaid service without phones, fuelling the market for used handsets. Leftover inventory from the last quarter of 2000 also cut into handset sales in key markets, Dataquest said.

The economic slump and the promise of new high-speed mobile data services, which require special handsets, led buyers to postpone handset replacement plans, according to Dataquest.

High growth rates in the mobile-phone market won't return as quickly as they disappeared, with grim prospects for the first half of 2002. Color screens on mobile phones may be a catalyst for replacement sales in the latter half of the year, according to Dataquest.

Market leader Nokia Corp. managed to extend its market share and sell 10.5 percent more phones than in 2000, while the overall market declined. The Espoo, Finland, based handset maker controlled 35 percent of the market in 2001 with 139,672 units sold, up from 30.6 percent and 126,369 units a year earlier, Dataquest said.

Motorola Inc. saw unit sales dip 1.7 percent, from 60,094 in 2000 to 59,092 in 2001, but the Schaumburg, Illinois-based company remains the world's second-largest handset vendor, with a 14.8 percent market share, up from 14.6 in 2000, according to Dataquest.

The difference in market share between the world's third-, fourth- and fifth-largest handset makers is minimal. Siemens AG, Samsung Electronics Co. Ltd. and L.M. Ericsson Telephone Co. take 7.4 percent, 7.1 percent and 6.7 percent of the pie, respectively, Dataquest said.

Of all the leading vendors Samsung saw the biggest growth, with 2001 unit sales at 28,234, up 36.8 percent from 20,639 in 2000. The Seoul-based company is successfully diversifying its product portfolio and is profiting from clever marketing, according to Dataquest.

Siemens, of Munich, recorded a 10.2 percent growth in unit sales, while Stockholm-based Ericsson, which in October last year merged its handset business with Japan's Sony Corp., sold 35 percent fewer handsets. The Sony Ericsson joint venture recently introduced its first phones and might win the third overall market-share position back from its German rival Siemens, Dataquest said.

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