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iSuppli raises phone forecast after strong Q3

After a strong third quarter, iSuppli raises its global cell phone handset shipment forecast to 675 million, but expects flat growth for the remainder of the year.

Despite inventory problems in China, shipments of cell phone handsets rose in the third quarter of 2004 to reach 170 million units.

That s according to the US market analyst iSuppli, which has raised its full-year forecast from 670 million to 675 million as a result.

If correct, the figure would represent an 18% increase on the 2003 figure. The handset market grew at a similar rate in 2003 and 2002.

Sales this year already total 508 million units after three quarters. Despite this iSuppli says that the traditionally-strong holiday season will be relatively flat, with shipments in the final quarter of the year expected to drop slightly on the third quarter figure to 167 million.

"Inventories of finished mobile phones in China that flared up in the summer must still be burned off, depressing production of new handsets," said iSuppli.

According to the analyst company Finland-based Nokia, the unrivalled market leader in the handset sector, has increased its lead over nearest rival Motorola thanks to its low pricing strategy. Nokia had a share of 30.2% in the third quarter, with shipments increasing 13% on the prior quarter. This represents a 16.5% market-share lead over Motorola, compared with only 12.6% in the second-quarter figures.

However, that increase came at a cost to Nokia as its average selling price (ASP) for phones dropped 5% as most of the other major manufacturers saw ASPs increase.

The trend of increasing ASPs could be set to stay as the handset makers introduce large numbers of 3G phones in the coming months.

According to a report from the news agency Reuters, Motorola plans to double the number of different 3G phones it offers next year. With 3G phones currently accounting for around 5% of the company s unit sales, this figure could rise to around 20% in 2005, said the report.

As the 3G expansion gathers momentum next year, the explosive growth of the handset market is expected to slow, with industry analysts predicting a market increase of 5-10%.

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