Cell phone sales race ahead

Almost 305 million units were sold between April and June and sales are expected to grow, according to research firm.

Driven largely by emerging economies, global sales of new mobile handsets continued to grow in the second quarter, according to new figures from the research firm Gartner. Almost 305 million mobiles were sold in the three months from April to June, up 12 per cent from the same period a year earlier. With the world's developed economies in a slowdown, sales grew at a slower pace than previously, but remained strong in key markets.

Sales growth was highest in the emerging markets of Asia, the Middle East, Africa and Eastern Europe. The worst numbers were in Japan, where the number of phones sold dropped by 22 per cent, a decrease twice as large as in the previous quarter. One of the fastest and earliest adopters of high-end mobile phones, the Japanese market is saturated and awaiting a new technical innovation to drive replacement purchases, the report said. Japanese mobile makers like Sharp, Panasonic and Kyocera have suffered as their home market slowed and international expansion efforts were unsuccessful.

The biggest loser among manufacturers was Motorola, whose troubled mobile handset business has been bleeding market share for two years. The company sold almost 10 million less phones in the second quarter of 2008 than it did a year earlier, and its market share dropped to 10 per cent, down from 18 per cent at the end of 2005. Motorola has not had a hit product since its hugely successful Razr phone, and Gartner expects it will be forced to cut costs and enter low-end markets to remain competitive. In March, the company announced it was separating its underperforming handset division from the rest of the business.

Motorola's lost market share was swallowed largely by Nokia, which sold more than 1m mobile phones for every day of the quarter, reaching a total of 120m, just under 40 per cent of the market. The company's market share grew by three per cent over the same period in 2007. The introduction of Apple's iPhone has invigorated demand for high-end smartphones and Gartner expects total sales in the segment to more than double in 2008, reaching 190m units, or 15 per cent of the total market. Industry watchers say Apple could sell upwards of five million iPhones in the coming year.

But the vast majority of the 1.28 billion phones expected to be sold in 2008 will be low-cost devices targeted at poor, first-time customers in the developing world. "Mobile phone manufacturers will be put under pressure to maintain healthy margins while they intend to further break through the emerging markets to increase sales," said Carolina Milanesi, the research director for mobile devices at Gartner.

@Email:[e-mail]