Global News

December 30, 2002
Handset manufacturers well poised heading into the 4th quarter

The global handset market was moving ahead in the third quarter of 2002, as leading manufacturers reported growing shipments heading into the crucial fourth quarter, according to In-Stat/MDR (www.instat.com). Finnish handset maker, Nokia, reported a return to growth and strong profitability, bolstered by sales of color-display models, and other vendors such as Samsung and LG Electronics in particular, also came out with strong 3Q shipment figures. Even struggling Sony Ericsson reported sales gaining momentum late in 3Q as the company introduced new mid-tier and entry-level models. Motorola, turning its first quarterly profit since the end of 2000, also had a decent quarter, with shipments up 8% compared with a year ago.

Despite the success in Q3, the heady days of strong double-digit percentage growth may not return for a while, if ever. Significant challenges still remain for handset makers, including the reluctance of end users (especially in Western Europe and North America) to spend beyond the $100 to $150 range for replacement models, spotty rollout of high-speed networks, the lack of compelling new mobile applications, high penetration rates in developed countries, struggling economies around the globe and market uncertainty due to political/terrorist tensions.

The high-tech market research firm has also found that:

• Overall, unit shipments in the third quarter rose more than 5% from the second quarter and are on track for a solid fourth quarter. Shipments are projected to grow more than 11% sequentially as newer models, many with color displays, reach end-users at affordable prices.
• Based on stronger than expected shipments in Asia, the former Eastern Bloc countries and Russia, total shipments are projected to reach 434 million units - that's a 7.7% increase year-over-year.