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Report: Mobiles on the move in 2004

Buyers upgrading to feature-rich phones will account for nearly three-quarters of units shipped, as global numbers continue to rise.

Stronger-than-expected growth is driving up global shipments of mobile phones, prompting one market researcher to revise earlier projections for 2004.

Bar chart: Units shipped in 2003, 2004

El Segundo, Calif.-based iSuppli said Wednesday that worldwide shipments may pass even the 625 million mark this year--about 25 million more units than it previously predicted. In comparison, 520.8 million mobile phones were shipped in 2003. The expected volumes in the third and fourth quarters are 156 million and 161.5 million, respectively.

Handset makers sold 155 million phones in the second quarter of 2004, compared with 152.5 million in the first quarter. iSuppli said demand in the second half of the year is normally stronger than in the first.

A recent study of the European, Middle Eastern and African markets also reported a positive trend.

Upgrade sales are responsible for much of the demand, just as in 2003, iSuppli said. The company estimates that 73 percent of global sales this year will be upgrades. The migration to so-called "feature phones," fitted with a digital camera or having a color display, will account for almost 90 per cent of the global volume by 2008, iSuppli forecasts.

Camera phones already represent more than a quarter of all handsets being shipped, and they already make up 20 percent of phones shipped by No. 1 handset maker Nokia, which entered the market late. The Finnish giant, however, has issues to ponder.

Though Nokia sold 45.4 million units in the second quarter, its market share has fallen to 29.3 percent, from 34.4 percent in 2003 and 36.3 percent in 2001, despite aggressive price cuts.

Nokia reduced its average per-handset selling price for the second quarter to $111, down from $116.90 in the first quarter. The price-cutting strategy brought down the average price of products in the entire market by 4.1 percent.

Rivals Samsung Electronics, LG Electronics and Sony Ericsson significantly improved their shares at Nokia's expense. Samsung rose one point to reach a 14.6 percent market share, while No. 2 Motorola accounted for 15.3 percent of the market.