March 22 2004

Cellphone manufacturers are predicting they will ship 585 million handsets this year

Cellphone manufacturers will ship 585 million phones in 2004, marking the second consecutive record-setting year for an industry mired in a slump not so long ago, according to a study from market watcher Strategy Analytics.

Handset shipments will be strong in parts of Asia, Latin America and Eastern Europe, where a relatively small percentage of the population owns cellphones, while handset replacements are expected to "surge" this year in more saturated markets in Western Europe and North America, according to Strategy Analytics analyst Neil Mawston.

The cheerful assessment is a sign of the continuing turnaround from 2001, when, for the first time, cellphone makers shipped fewer phones than the previous year. That slump came about because of fierce competition and a hemorrhaging global economy.

Since then, the economy has improved, and top cellphone manufacturers have "gotten serious" about their operations by chopping unnecessary fat from their supply lines and introducing new features, including camera phones, which have become enormously popular, Mawston said.

"The top five or six handset makers have really gotten their act together," Mawston adds.

Strategy Analytics also reported that 516 million cellphones were sold worldwide last year, a record spurred by the rapid sales of camera phones, the return of discretionary income and falling phone prices, according to Mawston. "We saw an explosion in global growth and the return of disposable wealth in the second half of 2003," Mawston said.

Strategy Analytics added that Nokia continued to lead handset manufacturers with its 34.8 percent share of the market, down less than half a percentage point from 2002. Motorola, in second place, saw a bigger loss of market share, dropping from 16.3 percent in 2002 to 14.5 percent in 2003. Third-place Samsung, fourth-place Siemens and fifth-place LG Electronics each registered single percentage point gains, according to the findings.