Sales of mobile phones rose by 20.5% in 2003, fuelled by replacement demand in mature markets, in addition to higher-than-expected growth in emerging markets, according to Gartner.
Worldwide unit sales reached 520 million in 2003. The strength of the pick-up in sales, after a sluggish 2002, was amazing, said Gartner principal analyst Ben Wood.
"In the mature markets, a lot of people last bought phones in 2000 or 2001, and so we're reaching the sweet spot for replacement. People want smaller, sexier, colour products."
People also want options such as cameras in their phones, and new purchases are as much about fashion as technology, Wood added.
In emerging markets, just having a mobile phone is a status ssymbol, and so the markets are more cost driven but are still growing fast.
Nokia lost a little of its market share, slipping to 34.7% from 35.1%, but Wood said the company is still spectacularly successful.
"Every competitor is out to beat Nokia. They operate in every area of the market and face competition at all ends. Nokia is also to be applauded for its innovation, as it often leads the market with new technologies," Wood added.
Motorola's share of the market also fell to 14.5% from 16.9%, while Samsung's share grew to 10.5% from 9.7%. Siemens' share rose from 8.0% to 8.4%. Sony Ericsson followed at 5.1%, down from 5.4% in 2002, almost matched by LG Electronics' 5.0% share. LG's share has grown markedly from only 3.2% in 2002.
Motorola lost share in 2003 because of problems with delivering products on time, but sales have shown signs of picking up since the beginning of this year.
Most of Siemens' sales have been in low-tier, low-cost and low-margin products, which are ideally suited to cost-conscious emerging markets.
All manufacturers are having to take bets on what technologies to add to their phones, because it unclear what the market will want, Wood said. There is a possibility that the primary function of mobile devices will shift so that they become gaming devices or music devices with phone functions, rather than primarily a phone.
Growth is set to continue in 2004, with the first quarter already looking strong. Gartner estimated that 580 million units will be sold this year.
Gillian Law writes for IDG News Service