Samsung to edge Motorola out of No. 2 spot

Brett Young and Eric Auchard

HELSINKI/NEW YORK: Samsung is close to passing Motorola to grab the number two spot in mobile phone sales globally, while struggling market leader Nokia of Finland stabilized its share during the second quarter, a survey released on Friday showed.

The data from research group Strategy Analytics (SA) also showed another Korean phone maker, LG Electronics, on the verge of cracking the world's top five mobile phone makers, dislodging Siemens of Germany, as Asian makers from Korea, Japan and China increasingly take share from Europeans.

"With strong sales in all major regions, global handset (sales) grew at a 38-percent annual rate in the second quarter," Strategy Analytics said in a statement.

The research group also boosted its annual worldwide forecast for 2004 to a record 670 million phone unit shipments from the 586 million it had forecast earlier this year.

The spiraling growth reflects strong demand from first-time buyers in emerging markets and from consumers in mature markets buying upgraded models with cameras and colour screens. Some 1.3 billion people worldwide owned mobile phones last year.

Strategy Analytics said Nokia was stung for the second quarter in a row, with its market share sliding to 28.9 percent from 36 percent a year ago. The company races to modernize a phone portfolio that is short on the camera and foldable "clamshell" models which are now popular with consumers.

But the Finnish company managed to put the brakes on its market share slide, slipping only three-tenths of a percentage point from the 29.2 percent it held during the first quarter, according to Strategy Analytics data. The number of phones Nokia sold actually rose to 45.4 million from 44.7 million.

That was down from market share levels of 35 percent and above that Nokia, long the industry's dominant force, has held for several years.

"Nokia showed tentative signs of quarter-on-quarter stabilization," Strategy Analytics said, noting how Nokia had responded quickly to a build-up of unsold inventory in spring by cutting prices and clearing out 3 million excess units.

MOTOROLA FEELS THE HEAT, LG RISING

By June, second-ranked Motorola raised its share to 15.4 percent from 13.9 percent a year ago, while Samsung Electronics was hot on the U.S. company's heels, rising at roughly twice Motorola's growth rate to 14.5 percent from 10.5 percent.

Motorola sold 24.1 million phones, which amounts to 8.3 million units or 53 percent more than a year earlier. Yet it was 1.2 million fewer when compared to 2004's first quarter.

Samsung, on the other hand, grew nearly twice as fast and given its rapid pace in recent years is poised soon to overtake Motorola, which pioneered the cellphone business during the 1960s and only lost the top spot to Nokia in the mid-1990s.

"Samsung impressed once again, as demand surged in North America," Strategy Analytics said.

Samsung shipped 22.7 million units worldwide.

LG Electronics looks set to surpass the fading Siemens of Germany while battling it out with Japanese-Swedish joint venture Sony Ericsson for fourth place in the global market.

Second-quarter figures showed Siemens with 6.6 percent, down sharply from the 8.3 percent Strategy Analytics reported in the first quarter. Sony Ericsson tied for fourth place with Siemens.

Each shipped 10.4 million units. Close behind, LG shipped 9.9 million units to take 6.3 percent of the market. During its earnings report last week, LG said it expected to ship 11 million mobile phones during the third quarter.

Strategy Analytics said an emerging component shortage may hurt handset makers and cast a shadow over the traditionally strong end-of-year sales season, but for now it still expected the usual seasonal upturn in sales during the fourth quarter.

(Additional reporting by Ben Klayman and Jean Yoon)