Cell phone sales to surge despite hang-ups

A half-billion cell phones will be sold this year despite the slowdown that has strangled the telephone industry, market research firm Gartner believes.

A half-billion cell phones will be sold this year despite the slowdown that has strangled the telephone industry, market research firm Gartner believes.

The prediction is part of Gartner's survey of wireless handset sales in the first quarter of 2001.

The cell phone market has been hammered because of softening phone sales. Carriers, especially in Europe, are banking heavily on new phone sales to earn back the billions of dollars spent building higher-speed telephone networks. The once roaring U.S. economy has slowed just when most handset makers have trained their sights on the U.S. market, which remains relatively untapped compared with Europe and Asia.

It will be tough, but that half-billion level will be reached, said Bryan Prohm, a wireless industry analysts at Gartner. Prohm believes industry analysts have been too negative about the sector.

"The unbridled optimism of the past has been superseded by an atmosphere of increasingly reckless pessimism," Prohm said.

Prohm acknowledged that the sector has been hit by a sales slowdown. He drew a comparison to biology to explain it.

Cell phone sales had grown between 45 percent and 60 percent a year for the last few years, a rate that is "obviously unsustainable," he said. It is similar to the growth spurt of a growing young man or woman. The older the person gets, the less they grow, he said.

Handset makers themselves have continually lowered their own estimates of cell phones sales. At the beginning of the year, there were expectations that more than 600 million would be sold.

But a slowdown began lowering those predictions. Ericsson once expected global cell phone sales in 2001 to be between 450 million and 525 million. But in April it said sales would instead range from 430 million to 480 million.

Only industry leader Nokia continued to predict that cell phone sales would reach the 500 million level. In April, when he made the prediction, Nokia President Jorma Olilla said, "We are sticking our head out a lot on this."

Nokia, the survey found, continues to outdistance itself in terms of market share, selling 35.3 percent of the nearly 97 million cell phones sold in the first three months of the year.

"That's a de facto monopoly," Prohm said.

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