Gartner Says Mobile Phone Sales Rose 21 Percent in the Second Quarter of 2005

Nokia and Motorola Account for Nearly Half of Worldwide Sales in the Quarter

Egham, U.K., August 25, 2005 —Worldwide mobile phone sales totaled 190.5 million units in the second quarter of 2005, a 21.6 percent growth from the same period last year, according to Gartner, Inc. In the second quarter of 2005, the mobile phone market experienced the second strongest quarter on record (in the fourth quarter of 2004 worldwide sales surpassed 195.3 million units).

"All the regions recorded growth this quarter apart from Japan that saw a small decline in demand compared to the second quarter in 2004," said Carolina Milanesi, principal analyst for mobile terminals research at Gartner, based in Egham, UK. "The sales in the mature markets of Western Europe and North America were driven primarily by sales of phones as replacements for older models and, to a lesser extent, by first-time buyers. In the emerging markets growth was boosted by an uptake in new connections as consumers took advantage of falling average selling prices of mobile phones."

Nokia and Motorola have strengthened their position in the marketplace, as the two companies accounted for 49.8 percent of worldwide mobile phone sales in the second quarter of 2005 (see Table 1). Nokia's market share grew 2.3 percentage points in the second quarter of 2005 to reach 31.9 percent. "Nokia regained its top position in Latin America and stepped up to the third position in North America benefiting from the successful launch of its Virgin Mobile which helped its lagging code division multiple access (CDMA) sales," said Hugues de la Vergne, principal analyst for mobile terminals research at Gartner, based in Dallas, Texas.

Motorola was the second best-selling vendor in Western Europe, a significant improvement compared to the same time last year when Motorola finished as the No. 5 vendor in the market. In North America, Motorola was the market leader with its share reaching 33.5 percent, while it was the No. 2 vendor in Latin America with 31.9 percent of sales in the region.

Table 1
Worldwide Mobile Terminal Sales to End-Users in 2Q05 (Thousands of Units)

Note* This table includes integrated digital enhanced network (iDEN) terminals. It excludes ODM to OEM shipments. Source: Gartner Dataquest (August 2005)

In Western Europe, mobile phone sales reached 37.4 million units, a 9.9 percent increase from the same time last year. While vendors did well in selling replacement phones, Gartner analysts said the transition to third-generation (3G) services was slow. "Users' lack of interest in 3G services, such as video calling, meant that users preferred 2.5G GSM phones to 3G handsets," Ms. Milanesi said.

Combined sales in Eastern Europe, the Middle East and Africa grew by 37 percent, as mobile phone sales rose to 33.6 million units. The markets in Russia, Poland, Ukraine, Turkey and Nigeria attracted more subscribers and boosted the aggregate total.

Mobile phone sales in North America totaled nearly 35.5 million units in the second quarter of 2005, an increase of 9.4 percent from the second quarter of 2004. Gartner analysts said this was a new record of unit sales for a second quarter in the region. Meanwhile, Latin America had an impressive quarter with mobile phone sales of 25.6 million units, an increase of 50 percent from the same period last year. Growth in this region was fueled by strong sales in Brazil and Mexico.

In Asia/Pacific (excluding Japan), sales reached approximately 48.3 million units in the second quarter, up 27.5 percent from the second quarter of 2004. "The healthy performance was mainly due to strong demand for handsets in emerging markets such as China, India, Bangladesh and Vietnam," said Ann Liang, principal analyst for mobile terminals research at Gartner, based in Taiwan. "Demand in these markets offset the somewhat sluggish performance of countries such as South Korea, where replacement sales slowed."

After staging a slight recovery in the first quarter of 2005, mobile phone sales in Japan reached 10 million units in the second quarter of 2005, down from 10.6 million units in the second quarter of 2004. "Features such as music players and fully fledged Web browsers helped replacement sales, but it wasn't enough for the market's overall performance to match last year's results," said Nahoko Mitsuyama, principal analyst for mobile communications for Gartner, based in Tokyo, Japan.

"The strength of the world's mobile phone market in the second quarter of 2005 reinforces Gartner's view that it will reach 780 million units by the end of the year," Ms. Milanesi said.