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Mobile market faces rocky road to growth

Consumers are likely to take advantage of aggressively-promoted new touch-screen mobile smartphones in the run-up to Christmas, analysts say.

If their predictions prove true, the mobile handset industry could end a year of falling sales. But as manufacturers gear up to service pent-up demand, they risk over-supplying the market. This could lead to price crashes later in 2010 as retailers try to move stock, Reuters reported.

Nokia, which has 37% of the market, said earlier that 2009 market volumes would fall 7% from 2008, but hoped for a bounce in the last quarter.

Strategy Analytics analyst Neil Mawston said the global handset market was getting very crowded and that oversupply and price cutting were "inevitable" in 2010. The firm said 3Q phone sales had slipped 4% year-on-year to 291 million. Research firm IDC said the drop was deeper - to 6% or 287 million phones.

Price cuts to clear old stocks had pricked up demand, but there was evidence of aggressive promotion of new units, especially in the UK, as Christmas drew near, they said.

MKM Partners' analyst Tero Kuittinen said the industry was getting oversupplied as it came out of the recession. "The danger here is that the cut-throat competition is going to blight the industry recovery," he said.

The most aggressive have been the Korean firms Samsung Electronics and LG Electronics, whose sales rose 16% and 37% respectively to record market shares. Samsung is now second to Nokia with 21% of the global market.

Despite the surrounding hype and record sales, Apple's market share was 2.5%, but still a record for Apple, Strategy Analytics said.


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