Handset sales to slow

A weakening global economy will reduce the growth of the cellphone market this year, according to market analysts Gartner.

Gartner expects market growth to slow to from 16 per cent last year to 11 per cent this. Market growth will slow from 11 per cent to 9 per cent in US dollar terms. Nokia has already forecast that the market will shrink in euro terms, as a result of strengthening exchange rates.

“We are starting to see impact of the economy,” said Gartner analyst Carolina Milanesi, adding increased competition and the weaker economy would also hurt average selling prices.

“Mobile phone manufacturers will be put under pressure to maintain healthy margins while they intend to further break through in the emerging markets to increase sales,” she said.

Milanesi said she expects cellphone sales in Western Europe in 2008 to be roughly equivalent to those of last year, underpinned by strong growth in the second half due to the launch of attractive new models.

Cellphone sales in Wetern Europe fell 16 percent year-on-year in the first quarter and 8 percent in the second quarter for phone makers such as Nokia and Sony Ericsson.

“It's a little bit (of weakness) in every country, with the exception of Germany and France, where we are seeing strong markets,” Milanesi said.

Handset vendors sold 304.7 million mobile phones globally in April-June, with strong demand in emerging markets lifting sales 11.8 percent from a year earlier, Gartner said.

Handset sales volumes in emerging markets surpassed developed markets in 2005 and last year 63 percent of phones were sold in these developing markets, according to Strategy Analytics.

Nokia was the main beneficiary of surging sales in emerging markets, increasing its market share from 36.7 per cent to 39.5 percent year on year.

South Korea's Samsung took 15.2 percent of the total market in the quarter, Motorola took 10 percent, Sony Ericsson 7.5 percent, and LG Electronics 8.8 percent.

Gartner said Motorola and Samsung sold more phones in the quarter than they shipped, reducing inventories. Nokia, Sony Ericsson and LG Electronics built up inventory.

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