Cellphone sales expected to exceed 750 million units this year

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Cellphone sales expected to exceed 750 million units this year

Growth in mobile phone sales is showing no signs of slowing down anytime soon. The industry posted a record first quarter with worldwide sales totaling 180.6 million units, a 17 percent increase from the first quarter of 2004, according to market research firm Gartner. The previous high for mobile phone sales was 153.7 million units in the first quarter of 2004.

The unexpected strong result prompted Gartner to increase its estimates for worldwide sales this year. The firm now believes mobile phone manufacturers will be able to bump sales to 750 million units, a 13 percent increase over 2004. Gartner forecasted sales in a range of 720 million. Gartner previously had forecasted sales of 720 million units.

“In the mature markets of Western Europe and North America replacement sales ensured a buoyant performance,” said Ben Wood, research vice president for mobile terminals research at Gartner.

Nokia remains the dominating manufacturer, despite a rather poor performance in North America. The firm sold almost 55 million phones and increased its market share from 28.8 to 30.4 percent. Motorola followed with 30.3 million phones sold and a share of 16.8 percent, Samsung solidified its third spot with 24.1 million phones and a share of 13.3 percent. LG was able to distance itself from Siemens with 11.1 million units sold. Siemens was the only manufacturer among the Top 6 ranking whose sales actually decreased year-over-year (12.3 million down to 9.9 million).

“More phones are being sold, but profit margins are shrinking,” Wood said. “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.”