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Mobile phone sales see first ever drop
Monday, March 11 2002
by Sheila McDonald


New figures show worldwide mobile phone sales dropped for the first time in the
industry's history last year, falling 3.2 percent to around 399.6 million units.



The numbers from Gartner Dataquest show that worldwide mobile phone sales showed
a remarkable compound annual growth rate of close to 60 percent between 1996 and
2000, a streak which ended abruptly in 2001.



The drop shows the extent to which withdrawal of subsidies has dented growth in
this historically buoyant market: in some cases, generous subsidies from mobile
operators had let end users buy phones at below cost.



According to the company's figures, Nokia, Siemens and Samsung all saw a growth
in sales during 2001, securing 35 percent, 7.4 percent and 7.1 percent of the
market respectively. Motorola slipped slightly, with sales falling 1.7 percent to
just over 59 million units, but still holds a distant second place behind Nokia's
139.7 million sales.



As the year closed Nokia further consolidated its lead, selling nearly 40 million
units in the fourth quarter to push its market share to nearly 37 percent during
the quarter.



Sales of General Packet Radio Service (GPRS) phones clearly failed to live up to
expectations in 2001, the analysts said, pointing out that GPRS network operators
were "almost universally unprepared" to persuade new or existing end users to
upgrade to GPRS.



Gartner Dataquest analyst Carolina Milanesi said operators and manufacturers must
both make a strong push to educate the end market about what GPRS phones can
offer. "They have to tell users, 'Look, you can get your e-mail on this phone,'
not, 'Look, it's GPRS,'" she said. "GPRS must not be sold as a 'faster WAP'
because WAP was such a disappointment."



Dataquest also pointed to the trend of people holding on to their phones for
longer: the numbers showed a strong growth in sales of Subscriber Identity
Modules (SIM) only, where consumers only buy the card that is inserted into the
back of phones instead of buying a new handset as well. The analysts said that
mobile phone users are waiting to upgrade their devices until a greater selection
of next-generation phones are available. 



Milanesi said the new Sony Ericsson phones were a "typical example of what
users are looking for," with colour screens and games that will inspire users to
upgrade. The availability of colour is a more significant catalyst for
replacement sales than initially envisioned, the analysts said.



"What we see for 2002 is still a difficult market, but it will be really
interesting to see what Nokia comes out with," she said, adding that compelling
new phones will drive the replacement market. "We will have growth in this year
-- clearly not from the start of the year, but more from the third and fourth
quarters."



Milanesi said GPRS will grow in the second half of 2002 as more handsets are
introduced and operators sort out key systems like billing for the data services.