Mobile phone sales out of the woods?

The mobile phone industry experienced a historic second consecutive quarter of growth this year as worldwide unit sales totaled 114.9 million, up 12% compared with the second quarter of 2002.

According to international research firm Gartner, mobile phone unit sales increased by two percent sequentially from the first quarter of 2003. In particular, sales in Japan, Latin America, and the developing markets of Central and Eastern Europe, and the Middle East and Africa far exceeded expectations during the quarter.

Bryan Prohm, principal analyst with the mobile communications research group for Gartner in North America says: "Strong sell-through momentum was again evident across all geographical regions, despite the unquestionably negative impact of the severe acute respiratory syndrome (SARS) epidemic in the Asia/Pacific region during April and May."

Gartner says Nokia continued to dominate the market and increased its market share to 35.9% in a quarter where it achieved several notable milestones, such as, successes in the CDMA market and a strong market share growth in Asia/Pacific, Central and Eastern Europe and the Middle East and Africa regions.

Sony Ericsson showed surprisingly strong growth in the second quarter, and underpinned by a strong performance in Japan and positive reception of its T610 mobile terminal in Western Europe, increased its market share to 5.5%. Motorola, the market leader in China, was hurt by SARS and saw its market share drop to 14.6%.

Gartner says there was no relief in the escalating crisis in the Chinese market, where sell-in once again outpaced sell-through by more than 40%.

"A profound correction in the Chinese handset market is becoming inevitable," Ann Liang, analyst with the mobile communications group for Gartner in Asia / Pacific says. "This will manifest itself through a combination of local vendor production cuts, local vendor consolidation and smaller local vendors withdrawing from the market altogether."

According to Ben Wood, principal analyst in Europe, "The Western European market remains driven as much by fashion as technology. Network operators and terminals manufacturers are continuing with their relentless marketing campaigns as the competition to secure and maintain customers intensifies. Manufacturers are relying on customers to upgrade to more expensive, feature rich, colour phones with cameras and games to drive increased revenues."

Wood says: "The global market is now clearly split in two - mature markets like Western Europe and North America where replacement growth is driving sales, and emerging markets like Africa, parts of Eastern Europe and China, where new sales are fuelling customer demand."

Gartner says that should the current pace of the mobile phone production and consumption continue through the second half of the year, the global market will achieve strong growth at the end of 2003, "a laudable achievement after two years of de facto market stagnation."

The smallest of SA`s cellular network operators, Cell C, recently predicted that the cellular market would grow to about 20 million subscribers by 2010 from the current base of 12.5 million and that the company will have just more than 20% of the total market share.

Vodacom`s corporate affairs group executive Mthobi Tyamzashe says that in SA, Vodacom has added over 300 000 customers since December 2002, taking its customer base to more than 7.8 million people.

"In addition, Vodacom now has about 250 000 more customers connected to its African networks than it did in December last year. In total, Vodacom now has some 8.6 million customers in SA, DRC, Tanzania and Lesotho," he says.

According to Tyamzashe the SA market looks promising, especially in light of statistics showing that South Africans are having increased disposable incomes are getting richer and that economic growth is likely to really take off over the next couple of years.

None of the local handset makers approached by ITWeb were prepared to comment on actual handset sales in SA.