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26 August 2006


Mobile phone sales grew 18% in Q2/2006; Q3 to reach 238m units  

Worldwide mobile phone sales totaled 229m units in second-quarter 2006, up 18.3% on second-quarter 2005, says Gartner Inc in its report “Market Share: Mobile Terminals, Worldwide, 2Q06”. This compares with a 23.8% increase in the first quarter. Gartner says that it had expected the slight slowdown and that its forecast is still on track to reach 960m units in 2006, with 238m units in third-quarter 2006.

“Mobile operators in the mature markets of Western Europe and North America struggled to maintain the customer acquisition growth levels seen in previous quarters, but mobile operators in emerging markets continued to sign new customers, driving handsets sales,” said Carolina Milanesi, principal analyst for mobile terminals research.

Leading vendors Nokia and Motorola both grew their market share and accounted for more than half of sales in second-quarter 2006. Nokia maintained its number 1 position with a 33.6% market share, gaining two percentage points on a year ago. But, as Nokia starts to ship more feature-rich phones (such as the N72 and N73) in third-quarter 2006, it needs to ensure that it can also cater for users who put fashion ahead of functionality and are looking for thin products, says Gartner.

“Motorola is the big winner this quarter,” said Milanesi. It achieved a market share of 21.9%, growing its market share by 4.2% year-on-year, the highest growth this quarter. Motorola maintained its lead in North America and Latin America and its number 2 position in other markets. With the MOTOFONE, KRZR and RIZR mobile phones due to ship from third-quarter 2006, Motorola should continue to gain market share in both emerging and mature markets, reckons Gartner.

Samsung retained its number 3 position but lost market share compared to the top two players. Sales reached 25.5m units in the second quarter, about half of Motorola’s total. Lower sales in the home market, coupled with weaker than expected demand in some key markets in Asia Pacific, explained Samsung’s weaker performance. To grow market share in mature markets such as Western Europe and North America, Samsung needs to match its high feature set with a more distinctive design says Gartner.

Sony Ericsson regained the number 4 position, with sales reaching 15.3m units. “Sony Ericsson’s bet on music and imaging continued to pay back. 25% of their sales came from the Walkman branded devices, and the first Cybershot phone k800 was also well received by consumers,” said Milanesi.  

Despite the success of the KG800 Chocolate phone, LG lost 0.4% market share year-on-year and slipped into fifth place. “Although The Chocolate phone sold very well and helped to increase LG’s brand awareness globally, ‘one swallow does not make a summer’. LG needs to bring to market more products from the Black Label series, including a 3G offering, to win back and hold the fourth position,” added Milanesi.

In Western Europe, sales in second-quarter 2006 reached 41.1m units, up 9% on second-quarter 2005. Sales of replacement handsets slowed as consumers are waiting for new products to appear in the third and fourth quarters in time for Christmas.

In Eastern Europe, the Middle East and Africa, sales of mobile phones to end-users grew 20% over second-quarter 2005 to reach 42.5m units. Sales in the Middle East and Africa accounted for more than half of sales in the region.

“The second quarter of 2006 proved to be a difficult one in North America, as network operators were unable to add new subscribers at the same rapid pace as in the first quarter of 2006,” said Hugues De La Vergne, principal analyst for mobile terminals research, based in Dallas, TX, USA. Sales of mobile phones to end-users reached 38.6m units, down 3.5% on first-quarter 2006. Although the number of new subscribers was down, sales of replacement handsets remained strong, which continued to drive the market.

In Latin America, sales reached 28.2m units in second-quarter 2006, up 7% on second-quarter 2005. “There were fewer new connections to mobile networks in the second quarter of 2006 than expected, which hindered handset sales,” said Tuong Nguyen, analyst for mobile terminals research, based in Arlington, VI, USA. Brazil is still the largest market in Latin America by volume, accounting for 28% of the region's sales.

In Asia Pacific, growth was driven by emerging markets such as India, China, Vietnam, Pakistan and Bangladesh. Total handsets sales reached 67.9m units in second-quarter 2006, up 5.4% on second-quarter 2005. “Manufacturers addressed opportunities in these markets by offering low-cost entry-level terminals and were able to gain market share quickly by following operators' expansions into rural regions or remote areas,” said Ann Liang, principal analyst for mobile terminals research, based in Taiwan.

In Japan, mobile terminals sales totaled nearly 11m units in second-quarter 2006, up 9% second-quarter 2005. “Three operators, NTT DoCoMo, KDDI au and Vodafone KK, introduced terminals with an embedded tuner for digital terrestrial television, which sold very well in the quarter. Handsets with a music player function and more memory to store downloads continued to attract users looking for replacement phones,” said Nahoko Mitsuyama, principal analyst for mobile communications research, based in Tokyo.

Table 1: Worldwide mobile terminal sales to end-users in Q2/06 (thousands of units)

Company name Q2/06 sales Q2/06 Market share (%) Q2/05 sales Q2/05 Market share (%)
Nokia 77,065.2 33.6 61,209.8 31.6
Motorola 50,170.7 21.9 34,258.4 17.7
Samsung 25,526.6 11.1 25,027.0 12.9
Sony Ericsson 15,281.3 6.7 11,903.1 6.1
LG 14,400.6 6.3 13,073.4 6.7
BenQ Mobile* 7,396.0 3.2 9,327.4 4.8
Others 39,276.5 17.2 38,894.8 20.2
Total 229,116.9 100.0 193,693.9 100.0

Includes sales of integrated digital enhanced network (iDEN) terminals. It excludes shipments from original design manufacturers to original equipment manufacturers.

* Shipments of BenQ and Siemens combined. Source: Gartner Dataquest (August 2006)

Visit: http://www.gartner.com