Gartner: economy hits cell-phone sales

Slowdown expected for third quarter

Economic woes slashed cell-phone sales growth in the third quarter of this year as consumers waited longer to replace their handsets, according to analyst firm Gartner, which predicts the market is likely to contract next year,

The global slowdown affected sales in both rich and poor countries, though results varied around the world. Western Europe and Japan were hit hardest, with unit sales below those of a year earlier. Growth was strongest in the Asia-Pacific region as a whole, and sales went up in the Americas and Eastern Europe, the Middle East and Africa as well.

Handset sales worldwide grew 6% in the third quarter, less than half the 16% growth that took place in the third quarter of 2007, according to Gartner. Unit shipments of phones grew to more than 308.5 million in the quarter from 291.1 million in the third quarter of 2007.

The news will be yet more grim in 2009, when Gartner expects worldwide unit sales to decline between 1% and 4% from 2008, according to Gartner analyst Carolina Milanesi.

New users still flocked to cell phones in the third quarter, but sales of replacement phones were hit hard, the company said. For example, in the Asia-Pacific region, consumers on average were waiting eight months to replace their handsets, rather than just four months as they had previously. As a result, sales were flat or down in mature markets such as Taiwan, Korea and Australia.

Rising sales to first-time cell users in emerging markets, such as India and China, helped drive unit sales up 13.8% to 116.7 million units in Asia-Pacific. Emerging-market gains also drove up sales in Eastern Europe, the Middle East and Africa by 13.1%. Unit sales in Latin America rose 5.5%.

But sales in Japan fell 28% from a year earlier and were flat from the second quarter, and sales in Western Europe also were down, from 47.2 million to 43.5 million.

Despite general weakness in the market for high-end phones, sales of smartphones such as the Apple iPhone and new Research in Motion BlackBerry models drove growth in North America, which was up 4.5% in the quarter, according to Gartner.

Motorola suffered most among the major manufacturers, seeing its sales fall from nearly 38 million units to less than 25 million, and its market share drop to 8% from 13%. Sony Ericsson Mobile Communications also lost some market share, while Samsung Electronics benefited from their woes, raising its market share from 14.4% to 17.1%.

The economy also dampened sales by Nokia, Gartner said, though it gained market share to 38.2% and saw sales rise from about 110 million units to nearly 118 million. Samsung, the number-two vendor, increased its sales by 26.3% and its market share from 14.4% to 17.1%.

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Tags GartnereconomySpecial IDcellphones

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