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Worldwide cell phone sales climb

A new study shows that if the current pace of mobile phone sales continues through the second half of the year, the market could achieve double-digit growth for 2003.

Worldwide mobile phone sales spiked during the second quarter of 2003, according to a new study from Gartner.

The research firm said sales of mobile handsets reached 114.9 million units in the quarter, a 12 percent increase year over year and a 2 percent gain over the first quarter of 2003. The increase comes after nearly two full years of overall market stagnation.

Gartner analyst Bryan Prohm said that if the current pace of mobile phone production and consumption continues through the second half of the year, the market should achieve double-digit growth for the full calendar year.

"So long as carriers and manufacturers can work together to open the door for new users in emerging markets, we should continue to see substantial growth," he said. "The results have been very encouraging thus far, and we're expecting there could be significant growth on tap for the second half."

Gartner said the results were due to unusually high demand from many emerging markets including areas in the central and eastern parts of Europe, the Middle East and Africa. The research firm also reported strong demand in the Asia-Pacific region, despite the impact of the SARS (severe acute respiratory syndrome) virus. Japan and Latin America saw mobile phone sales grow during the second quarter as well, Prohm said.

"We're increasingly seeing divergence between mature markets...and emerging markets, where there is a very pressing need for telephony services," he said. "However, it's apparent that there is plenty of demand from both sides right now."

According to the study, China is the only major region where the cell phone market remains uncertain. Vendors have been forced to radically cut prices in the country to get rid of excess inventory. Gartner predicted a major shakeout in the Chinese market during the second half of 2003.

"Western manufacturers slowed production related to SARS, so that should help," Prohm said. "But I'd also expect to see the local vendors begin considering consolidation strategies after the beginning of 2004."

Nokia maintained its grasp on the worldwide mobile phone market, garnering nearly 36 percent of market share. Motorola's market share dropped to 15 percent, while Samsung's share rose to 10 percent. Gartner said several factors contributed to Nokia's dominance, including growth of its CDMA (code division multiple access) handset sales in North America and its increasing presence in emerging markets.