Mobile handsets ring low

AMSTERDAM: Nokia and Sony Ericsson were the big winners of the global mobile phone industry in the second quarter, but overall growth slowed and inventories rose, a survey showed Monday.

On the other end of the scale, Samsung lost market share.

Increased sales driven by colour screens and camera phones, as well as demand in emerging mass market India were offset by the crisis around the Severe Acute Respiratory Syndrome (SARS) virus which hampered sales in large parts of Asia, particularly China, research group Strategy Analytics said.

The summer heat-wave in Europe and lower phone subsidies by mobile operators in China added to concerns that the second half of 2003 might be slower than the first, the U.S. group said.

Sales from handset makers to distributors such as mobile operators and retail chains rose a firm 11 percent to 111 million units, but subsequent sales to consumers lagged and rose only six percent to 108 million units, it added. Sales growth slowed from the first quarter when shipments increased 16 percent from the year-ago period.

Despite the deceleration Strategy Analytics reiterated its 2003 forecast for a six percent rise in shipments of cellphones to 455 million, driven mostly by developing markets which need cheap phones.

"Cheap phones continue to sell well, and prices are falling twice as fast in China than elsewhere due to heavy competition from new Asian vendors," said Strategy Analytics's Neil Mawston by telephone.

The average wholesale price per phone for the top six vendors is now around $140 versus $160 a year ago.

NOKIA GAINS, SAMSUNG LOSES

Nokia was the biggest gainer of the quarter, with its market share rising to 37 percent from 35 percent in the first quarter, gaining on its rivals in both the biggest market, for GSM phones, as well as the smaller CDMA segment.

Nokia's stronghold has always been the GSM sector, which represent some 65 percent of the world market, in which Nokia has 46 percent share. But this year it has added a range of CDMA phones to crack the markets in the Americas and parts of Asia.

It was a weak quarter for second-placed Motorola from the United States and third-placed Samsung Electronics from South Korea.

Motorola, which is big in hard-hit China, saw its share drop to 14.2 percent from 15.4 percent in the first quarter. It was close to 17 percent last year.

Samsung stopped dead in its tracks after a long hard run in recent years, which propelled it into the top five. Its share fell to 10.8 percent, from 12.1 percent in the first quarter, as its mainstay Asian customers postponed orders. Because its phones sell at a higher price, Samsung's revenues outpaced Motorola's.

Siemens from Germany was hardly changed at 7.3 percent versus 7.4 percent in the first quarter, but well below last year's eight percent despite new, expensive models.

It was a turnaround quarter for Japanese Swedish joint venture Sony Ericsson. Its market share rose to six percent, from five in the first quarter, as its new camera and gaming handsets struck a cord with European and Japanese consumers.

Ericsson alone had a share of more than 10 percent only three years ago. The 18-month old venture now aims to be profitable with a seven percent share.

Up and coming LG Electronics from Korea, which also manufactures for Asian rivals, retrenched slightly. It fell to 4.8 percent from 5.2 percent in the first quarter.

© Reuters