Gartner: Terminals Up 12%Gartner: Terminals Up 12%

STAMFORD, Conn. -- The mobile phone industry grew for the second consecutive quarter, as worldwide mobile phone sales totaled 114.9 million units in the second quarter of 2003, a 12 percent increase compared with the second quarter of 2002, according to Gartner, Inc. (NYSE: IT and ITB). Sales rose 2 percent sequentially from the first quarter of 2003.

"Strong sell-through momentum was again evident across all geographical regions, despite the unquestionably negative impact of the severe acute respiratory syndrome (SARS) epidemic in the Asia/Pacific region during April and May," said Bryan Prohm, principal analyst with the mobile communications research group for Gartner in North America. "Sales in Japan, Latin America, the developing markets of Central and Eastern Europe, and the Middle East and Africa far exceeded expectations during the quarter."

Nokia continued to dominate the market and increased its worldwide market share to 35.9 percent in the second quarter (see Table 1). Nokia achieved several notable milestones in the quarter, such as success in the code division multiple access (CDMA) market and strong market share growth in the Asia/Pacific, Central and Eastern Europe and the Middle East and Africa regions. Sony Ericsson showed strong growth in the second quarter, with robust sales in Japan and a positive reception of its T610 mobile terminal in Western Europe. Motorola, the market leader in China, was hurt by SARS and saw its market share drop to 14.6 percent.

{Table 1}

Gartner analysts said there was no relief in the escalating crisis in the Chinese market, where sell-in once again outpaced sell-through by more than 40 percent. "A profound correction in the Chinese handset market is becoming inevitable," said Ann Liang, analyst with the mobile communications group for Gartner in Asia / Pacific. "This will manifest itself through a combination of local vendor production cuts, local vendor consolidation and smaller local vendors withdrawing from the market altogether."

"The Western European market remains driven as much by fashion as technology," said Ben Wood, principal analyst with the mobile communications group for Gartner in Europe. "Network operators and terminals manufacturers are continuing with their relentless marketing campaigns as the competition to secure and maintain customers intensifies. Manufacturers are relying on customers to upgrade to more expensive, feature rich, color phones with cameras and games to drive increased revenue."

"The global market is now clearly split in two mature markets," Wood said. "There is the replacement market in regions such as Western Europe and North America that is driving sales, and emerging markets such as Africa, parts of Eastern Europe and China, where new sales are fueling customer demand."

Gartner analysts said that should the current pace of mobile phone production and consumption continue through the second half of the year, the global market will achieve strong growth for the year-end results in 2003, a laudable achievement after two years of de facto market stagnation.

Additional information is available in the Gartner Alert "Mobile Terminal Market Shares: Worldwide, 2Q03." This Alert provides analysis on how the global mobile phone industry performed in the quarter. This Alert is available on Gartner's Web site at http://www3.gartner.com/DisplayDocument?id=408292&ref=g_search.

Gartner analysts will provide additional analysis on the mobile and wireless segment at Gartner Symposium/ITxpo 2003, to be held October 19-24 in Orlando, Florida. Gartner Symposium/ITxpo is the IT industry's largest and most strategic conference, providing business leaders with a look at the future of IT. For more details or to register for Gartner Symposium/ITxpo 2003, visit www.gartner.com/us/symposium/us or call 1-800-778-1997. Members of the media can register for the event by contacting Maria DiMasi at 212-699-2734 or e-mailing [email protected].

Gartner Inc.