Handsets Break 1B Mark

The cellphone industry broke new ground in 2006, surpassing the 1 billion mark for the first time, according to the number crunchers at IDC .

The research firm's Quarterly Mobile Phone Tracker says vendors shipped a total of 1.019 billion units in 2006, or 22.5 percent more than the 832.8 million units they shipped in 2005.

For the quarter ending Dec. 31, 2006, vendors shipped of 294.9 million units, or 19.7 percent more than the 246.4 million units they shipped during the same quarter in 2005. This marked a record volume for a single quarter.

Nokia Corp. (NYSE: NOK) once again came out on top, with fourth quarter market share of 35.8 percent. Despite financial woes towards the end of the year, second-placed Motorola Inc. (NYSE: MOT) also grew its share with a 22.3 percent slice of the market.

The fiercest battle is going on below the big two. Samsung Corp. grabbed a 10.9 percent share, but it's facing a resurgent Sony Ericsson Mobile Communications , which grew its fourth quarter shipments by 61.5 percent year-over-year. LG Electronics Inc. (London: LGLD; Korea: 6657.KS) rounds out the top five, ending 2006 with a 5.8 percent share.

Table 1: Top Five Mobile Phone Vendors, Shipments, and Market Share, Q4 2006 (Preliminary)
Vendor Q4 2006 Shipments Q4 2006 Market Share Q4 2005 Shipments Q4 2005 Market Share Year-Over-Year Delta
Nokia 105,500,000 35.8% 83,700,000 34.0% 26.0%
Motorola 65,700,000 22.3% 44,700,000 18.1% 47.0%
Samsung 32,000,000 10.9% 27,200,000 11.0% 17.6%
Sony Ericsson 26,000,000 8.8% 16,100,000 6.5% 61.5%
LG Electronics 17,000,000 5.8% 16,200,000 6.6% 4.9%
Others 48,700,000 16.5% 58,500,000 23.7% -16.8%
Total 294,900,000 100.0% 246,400,000 100.0% 19.7%
Source: IDC

Unlike previous years, 2006 saw demand increasingly driven by developing markets, such as China and India; the mature markets such as North America and Western Europe are approaching saturation.

"It was not long ago that shipments into mature markets, including Japan, North America, and Western Europe, consumed the majority of devices shipped worldwide," says Ramon Llamas, research analyst in IDC's Mobile Technology and Tracking team. "More recently, however, device shipments into emerging economies in Asia/Pacific, Central and Eastern Europe, the Middle East, Africa, and Latin America have surpassed shipments to mature markets, and the difference between the two continues to grow."

This is a double-edged sword for vendors. Sales to developing markets helped to drive Nokia's record-breaking fourth quarter. Such sales, however, are generally to lower-income customers and drives down the average selling price of a handset, which tends to alarm investors. (See Nokia's Profits Up 16%.)

— Dan Jones, Site Editor, Unstrung

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