Mobile phone sales head for slowdown

Worldwide mobile phone sales totaled 412.7 million units in 2000, a 45.5 per cent increase over 1999 results, according to Dataquest. Despite some "hiccups" within the industry and its key supply channels, overall shipments continued to perform well throughout the year.

However, persistent rumours of a market slowdown that dogged the industry throughout the year started to prove true toward the end of 2000. The afterburners that propelled several years of consistently high growth rates now suddenly seem to have been switched off, Dataquest spokesman said. Indeed, there is some significant stock carry over to the beginning of 2001, meaning the number of total shipments in 2000 was about six million units lower than previous estimates.

Nokia strengthened its lead as the No One vendor in the market during 2000 with shipments growing 66 per cent over 1999. Some of the company's success was attributed to a strong second half in 2000 when 59 per cent of sales occurred.

Dataquest analysts said 2000 was a transitional year for the mobile phone industry, and they identified a number of issues that affected growth in the industry. Global capacity caught up with demand. Lowered barriers to entry allowed an influx of smaller manufacturers that were able to exploit demand in some of the key Far Eastern markets, such as China. Wireless Application Protocol (WAP) failed to impress increasingly savvy mobile users, and thus what had been anointed as the catalyst for the next wave of terminal sales growth turned out to be a little more than a ripple. Finally, mobile operators began to shift attention away from straightforward subscriber acquisition to a greater focus on lifetime customer loyalty.

The long term prospects for the mobile sector look tough said Dataquest analysts. Few manufacturers are able to generate healthy profit margins, placing the necessary investments in next generation handsets developments at risk. The smart money may be riding on players that are unfamiliar with the upper echelon vendors.

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