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News Article

Handset market demonstrates healthy growth

Worldwide shipments of mobile phone handsets rose significantly in the second quarter of 2003, according to figures from Gartner.
The market research firm says that 114.9 million handsets were sold in the June 2003 quarter,a 12% rise compared to the same period last year. Sequentially, handset sales were up 2% compared to the March 2003 quarter.

"Strong sell-through momentum was again evident across all geographical regions, despite the unquestionably negative impact of the severe acute respiratory syndrome (SARS) epidemic in the Asia/Pacific region during April and May," said Bryan Prohm, principal analyst with Gartner’s mobile communications research group in North America.

In particular, sales in Japan, Latin America, and the developing markets of Central and Eastern Europe, and the Middle East and Africa far exceeded expectations during the quarter, said Prohm.

Nokia sold 41.23 million handsets in the second quarter of 2003, giving the Finnish company a 35.9% share of the world market. Motorola, the market leader in China, was hurt by SARS and saw its market share drop to 14.6%, equivalent to 16.73 units in the quarter.

Samsung and Siemens had market shares of 9.9% and 7.0% respectively, while Sony Ericsson showed surprisingly strong growth in the second quarter. Underpinned by a strong performance in Japan and positive reception of its T610 mobile terminal in Western Europe, Sony Ericsson increased its market share to 5.5%.

Gartner said there was no relief in the escalating crisis in the Chinese market, where sell-in (shipments from manufacturers into the sales channels) once again outpaced sell-through (sales to consumers) by more than 40 percent.

"A profound correction in the Chinese handset market is becoming inevitable," said Ann Liang, analyst with the mobile communications group for Gartner in Asia/Pacific.

"This will manifest itself through a combination of local vendor production cuts, local vendor consolidation and smaller local vendors withdrawing from the market altogether."

The Western European market remains driven as much by fashion as technology, according to Ben Wood, principal analyst in Europe. "Network operators and terminals manufacturers are continuing with their relentless marketing campaigns as the competition to secure and maintain customers intensifies," he said.

"Manufacturers are relying on customers to upgrade to more expensive, feature rich, colour phones with cameras and games to drive increased revenues."

Wood added that the global market is now clearly split in two - mature markets like Western Europe and North America where replacement growth is driving sales, and emerging markets like Africa, parts of Eastern Europe and China, where new sales are fueling customer demand.

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