Cell phone sales hit 1 billion mark

Emerging markets help sales jump 16 percent from a year earlier, with Nokia leading in market share, according to Gartner.

Sales of cell phones skyrocketed to more than 1 billion in 2007, according to data released Wednesday from market research firm Gartner.

More than 1.15 billion mobile phones were sold worldwide in 2007, a 16 percent increase from the 990.9 million phones sold in 2006, the firm said.

The developing world helped boost sales significantly. And in the developed world, sales of new cell phones was drive by consumers looking for replacement phones with tons of features.

"Emerging markets, especially China and India, provided much of the growth as many people bought their first phone," Carolina Milanesi, research director for mobile devices at Gartner, said in a statement. "In mature markets, such as Japan and Western Europe, consumers' appetite for feature-laden phones was met with new models packed with TV tuners, global positioning satellite (GPS) functions, touch screens and high-resolution cameras."

Nokia leads the market, gaining 40 percent market share for the first time during the fourth quarter. The company sold some 435 million phones in 2007. Meanwhile, Motorola lost market share during the year, slipping to third place in terms of total market share. Other companies like LG, Samsung, and Sony Ericsson helped take up the slack. These companies all gained market share in 2007.

Gartner's analysts expect mobile handset sales to decelerate slightly in 2008 with sales growing only 10 percent. While most of the new growth will come in the developing market, it will be the saturation of the market in North America and Western Europe that will cause momentum to slow a bit. North America and Western Europe are expected to account for about 30 percent of global mobile device sales in 2008.

As for the handset makers themselves, a few questions loom large in 2008. First, will Nokia be able to keep up its momentum? It will need to penetrate the North American market to do so, say Gartner analysts. Nokia has not had great success in the U.S. market despite its efforts. The Finnish company has set up a design facility in Southern California specifically to address the North American market. And with U.S. consumers primed with the Apple's iPhone for cool new phones, maybe Nokia will finally be able to get some of its high-end N-series phones in with a major carrier like Verizon Wireless.

There might also be opportunity for Nokia as Verizon Wireless opens its network to allow uncertified devices to operate on its "open" network. But it is still unclear how Verizon will charge for this service. If it is priced too high, consumers may not opt for a service that allows them to bring whatever device they want to the network.

The other big question, of course, is what will happen to Motorola? The company's executives don't expect a major turnaround this year of its mobile device business. The company has said that it is considering its "strategic options," which may or may not include selling the handset business. Even though Motorola executives say they'd rather not sell the handset business, the option is still on the table for now.

In its report, Gartner also noted the emergence of new players in the handset market, including ZTE, a Chinese company that sells low-end phones at aggressive prices, and Research In Motion and Apple, each selling more feature-rich phones designed to take advantage of data services.

And with Google's Android cell phone software making its way into the market sometime this year, it will be interesting to see where the industry is a year from now.

 

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