Gartner: 2005 looking good for handset sales

Market researcher ups its estimates for the year after collecting strong data on first quarter.

Strong first-quarter sales of mobile phones brighten the outlook for all of 2005, according to market research company Gartner.

Global sales totaled 180.6 million units in the first three months of the year, compared with 153.7 million units in the same period last year, the market researcher said this week.

Because of the strong first-quarter figures, Gartner has revised its outlook for 2005, saying now that global sales will approach 750 million units. Previously, the company's estimate was 720 million units.

The new estimate would represent 13 percent growth over 2004, the company noted.

At the same time, the market isn't necessarily an easy one to succeed in, an analyst said.

"More phones are being sold, but profit margins are shrinking," Ben Wood, Gartner's research vice president for mobile gear, said in a statement. "This is because consumers in emerging markets want cheap handsets, and competition in more-developed markets keeps prices low. Smaller manufacturers will feel the pressure, and many of them are already struggling to stay profitable. We expect some of them to be bought out, and a few will choose to leave the mobile-phone market completely."

Nokia's market share grew, though it did badly in North America. Among the factors that boosted Nokia was its aggressive pricing strategy in the fast-growing Chinese market. Worldwide, the Finnish company shipped 54.9 million units in the quarter.

Motorola, which Gartner ranked second, had global sales of 30.3 million units.

No. 3 Samsung boosted its sales, particularly in Western Europe and Russia, while LG, ranked fourth, did well in North America in the high-capacity code division multiple access (CDMA) segment, Gartner said.

Siemens, in the fifth position, saw its market share slip to its lowest level since 1999, Gartner said. The company shipped 9.942 million units, just ahead of Sony Ericsson's 9.900 million units.

Gartner said both companies have 5.5 percent shares. By comparison, during the first quarter of 2004, Siemens had 8 percent market share and Sony Ericsson had 5.6 percent, Gartner said.