Sars outbreak fails to dent second-quarter mobile phone sales

Changing fashions and maturing markets continued to drive mobile phone sales in the second quarter of the year, pushing worldwide...

Changing fashions and maturing markets continued to drive mobile phone sales in the second quarter of the year, pushing worldwide unit sales up 12% over same time last year, according to market researcher Gartner.

Worldwide mobile phone unit sales amounted to 114.9 million units during the second quarter, 2% higher than the previous quarter, Gartner said.

Unit sales also grew year on year in the first quarter. The two consecutive quarters of year on 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 Sars in the Asia-Pacific region.

Sales in Japan, Latin America and the developing markets of Central and Eastern Europe, the Middle East and Africa showed strong growth, 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 latest phones with games, cameras and colour," he said.
Finnish handset maker Nokia continued to lead the pack in terms of units sold, taking 35.9% of the market for the second quarter, up from 34.2% 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 market, by producing CDMA handsets the company can offer consumers more choices and compete with other CDMA providers, Wood said.

Nokia announced in April that it would begin producing CDMA phones in China in an effort to drum up more sales in the country.

China spelled trouble for number-two manufacturer Motorola during the quarter, however, as it lost share because of the Sars outbreak.

Motorola's market share of unit sales fell from 17% in the second quarter of 2002 to 14.6% 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 came in third with 9.9% of worldwide unit sales, while Siemens took 7% during the second quarter. Sony Ericsson Mobile Communications landed with 5.5% of unit sales.

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

Scarlett Pruitt writes for IDG News Service

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