2002: A merry new year for cell phones?

Nokia predicted between 420 million and 440 million handsets will be sold worldwide in 2002--a 10 percent to 15 percent increase from this year's tally. But a sour note accompanied the news, with Nokia cutting its own sales forecasts for the fourth quarter by 10 million.

If the likes of Nokia or Motorola--which believes as many as 460 million handsets will be sold next year--are correct, 2002 will be a rebound year for handset sales. Barring a record-setting wave of buying in the next five weeks, this would also make 2001 the first year in which the number of cell phones sold was lower than the year before.

"The halcyon days of double-digit growth are indeed past," wrote Farid Yunus, an analyst with The Yankee Group. "A rebound is nevertheless expected in 2002."

The growth in 2002 is expected to be fueled mainly by the introduction of many new high-speed networks in the United States, Europe and Asia that will enable new wireless services. Analysts believe subscribers will buy new handsets to take advantage of these services, like reading e-mails with attachments on their phones.

The Yankee Group believes about 435.7 million handsets will be sold in 2002. That would be an increase of about 10 percent from the 395 million handsets it believes will be sold this year.

Lehman Brothers remained bullish even though it recently said it had to "fine tune" its own 2002 forecast, lowering the number of handsets it expects to be sold in 2002 from 450 million to 440 million. The Wall Street firm thinks there will be 221 million new wireless subscribers in 2002--a spike in growth fueling its sales outlook, according to a recent research note.

"Vendors appear to be adopting cautious production plans," Lehman analysts wrote in a research note. "Thus, we believe that 2002 unit shipments are likely to be much better matched with end demand. In general, we retain a positive view on the handset market in 2002, given a growing subscriber base."

Gartner Dataquest has yet to unleash its own set of projections, but wireless analyst Bryan Prohm believes handset sales in 2002 will grow between 10 percent and 20 percent over 2001.

"Macro-economic problems are now encroaching upon the Asia-Pacific, in addition to Japan, North America and Latin America, which are already being bitten by that bug," Prohm said.

The most bullish projection for 2002 sales comes from ARC Group in Surrey, England. The wireless industry watcher is "quite bullish," with a prediction of 600 million handsets being sold next year, said Dave McQueen, a wireless analyst.

But forecasts are what they are--educated guesses that are often wrong. And 2001 was a particularly egregious year for the seers, with unexpected events such as the World Trade Center and Pentagon terrorist attacks. There was also the unexpected cooling of the Western European handset market, which accounts for about a third of the world's wireless subscribers.

"Things changed quickly," said Lauri Kivinen, a Nokia spokeswoman.

"A lot of people didn't anticipate the slowing economy," said Weli Su, a senior analyst at IDC. Su said she expects 445 million handsets will be sold worldwide in 2002, about an 8 percent increase from the 411.5 million handsets that IDC believes will be sold this year. "Things took a really bad turn."