Global sales of cell phones declined in 2001 for first time ever

By

Posted 8:29AM on Tuesday, March 12, 2002

NEW YORK - For the first time, worldwide sales of new cell phones dipped last year as wireless carriers reduced subsidies for new phones and many consumers held off on upgrades, tech consultants Gartner Dataquest report. The decline was 3.2 percent, from 412.7 million handsets in 2000 to 399.6 million in 2001. That is a sharp break from the growth rates between 1996 and 2000, when each year saw a sales increase of 60 percent, Gartner said in Monday's report. In the near future, the industry can expect percentage sales growth "on the order of small single digits, or, to be extremely optimistic, the low double digits," said Gartner analyst Bryan Prohm. Most of the decline was in western Europe, where cell phone use is already nearly ubiquitous. Phone companies decreased their discounts for new cell phones with prepaid calling plans, a money-losing strategy that had turned into a cheap way for consumers to upgrade their handsets, Prohm said. Sales were up in North America despite a mild recession in the United States. The first cell phones to use the next generation of wireless services, launched in Europe and Japan, failed to find many buyers -- despite promising features like improved Web access. Prohm said consumers were looking for "real improvements over older models" before they will upgrade. He said recently introduced phones with color displays could lead to a revival of the market. Gartner's numbers showed: --Finland's Nokia Corp. extending its lead among cell phone makers with a 35 percent market share in 2001, up from 30.6 percent in 2000. --Motorola Inc., Schaumburg, Ill., second with a market share nearly unchanged at 14.8 percent. --LM Ericsson AB of Sweden selling 35 percent fewer phones in 2001 compared to 2000, falling from third to fifth place and being overtaken by Siemens AG of Germany and South Korea's Samsung Corp. Ericsson last year joined its handset operations with those of Japan's Sony Corp. Together, the two companies had enough sales last year to place third in market share.