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Nokia loses its grip on handset market share

Competitors are wrestling market share away from the cell phone giant, as worldwide handset sales surge.

Nokia rivals are wrestling market share away from the cell phone giant, as worldwide handset sales surged in the first quarter of 2004, according to a new study.

Major mobile handset vendors shipped 153 million units worldwide, about 40 percent more than in the same period the previous year, research firm Strategy Analytics said Thursday. The new study gels with the research firm's February forecast of a total 2004 shipment of 585 million phones.

Nokia accounted for 44.7 million of those shipments, still leading the sector, but down around 11 million units from the previous quarter. The company's market share dropped to 29 percent in the first quarter from 35 percent in the same period a year ago, as its competitors increased their shares with a range of new products.

Nokia "struggled to maintain the proper product mix in midrange handsets by offering color and compelling camera phone designs," Strategy Analytics said. "This quarterly stumble is an indication that its core reference design portfolio needs to be updated to allow greater product flexibility that will divert share losses over the long-term."

Though Nokia may reduce prices in the coming quarters to stay ahead of competition in growth rate, this could only be a short-term solution, the report said.

Motorola, Nokia's closest competitor, saw 51 percent growth. Meanwhile, handset makers Samsung and Sony Ericsson also had strong quarters, and South Korea's LG led the pack with 56 percent growth.