Mobile phone sales surge by 30%

Worldwide mobile phone sales surged by 30% to 674 million units in 2004, says international research firm Gartner.

According to Gartner`s latest research, the market received a boost in the last quarter of 2004 when sales bounced by 24% compared to the same period a year ago.

The forecast is that this momentum should continue into 2005 when the market is expected to exceed 730 million units.

Hugues De La Verne, Gartner principle mobile terminals research analyst (Americas), says: "In mature markets, it remains to be seen whether the record-breaking levels of replacement sales can be sustained. In emerging markets, the major battleground in 2005 will be the sub $50 (R300) handset arena."

However, Gartner remains impressed with the strength shown by the mobile market last year.

"The market exceeded even the most optimistic forecasts in 2004. Strong replacement sales, seasonal dynamics and continued growth in emerging markets, especially Latin America, delivered the highest sales volume ever recorded," says Ben Wood, Gartner principal analyst for mobile terminals research.

Finnish mobile manufacturer Nokia rebounded in the last three months of 2004, reaching a market share of 33% after having dropped to 28.8% during the fist half of the year.

"Its broad portfolio of devices combined with its profitable high volume low-tier products will help sustain this position in 2005. But it must regain the initiatives in terms of brand and technology leadership in the face of strong competition from the other top five vendors," Wood says.

In the fourth quarter, Motorola regained its second position ahead of Samsung, with higher than expected growth, Gartner says.

Motorola`s revitalised brand, due largely to the positive reviews of the RAZR V3, helped lead strong sales in Europe and North America. This was combined with aggressive pricing in emerging markets, particularly in Asia Pacific and Latin America.

Samsung increased its brand awareness in 2004, particularly in China, and it also demonstrated market leadership in some areas such as multi-mega pixel camera phones.

To challenge Motorola and Nokia, Samsung will need to change its strategy and expand its product portfolio into the high volume, lower margin segment, the Gartner analysts say.

In Western Europe, strong Christmas sales combined with aggressive pricing - both on hardware and promotional contracts - helped sustain sales momentum.

Other than price, colour screens, cameras and fashion or design remain the key sales drivers in this region.

The North American market has been led by replacement sales. Generous promotions offering multiple "free" handsets on family price plans and declining prices for colour/camera phones fuelled growth.

In Asia/Pacific, replacement sales played a significant role in more mature markets like Australia, Hong Kong and Singapore remained buoyant with competition in Hong Kong intensifying further. In China, mobile phones with colour displays and camera phones continued to grow.

GSM sales accounted for 85% of total sales due to competitive pricing and focus on low-tier market by China Mobile. Overall mobile phone sales in Japan declined in 2004.

Gartner says Latin America ended 2004 with strong sales in the fourth quarter. Almost 19 million new subscribers were added in the fourth quarter, with more than seven million subscribers in Brazil.