Gartner Dataquest Says Worldwide Mobile Phone Sales Showed Signs of Rebounding in Second Quarter of 2002

SAN JOSE, Calif., August 27, 2002 — Worldwide mobile phone sales totaled 98.7 million units in the second quarter of 2002, a 0.8 percent increase from the same period last year, according to Dataquest Inc., a unit of Gartner, Inc. (NYSE: IT and ITB). Gartner Dataquest analysts said there are signs that the mobile phone industry has reached a point of stability and is positioned for stronger growth.




"Mobile terminal manufacturers are preparing for a comprehensive transition of their product portfolios during the back half of 2002 to embrace color displays and other mobile data-enabling technologies," said Bryan Prohm, senior analyst with the Mobile Communications Worldwide research group for Gartner Dataquest. "Carriers meanwhile, are increasingly focused on commercializing new applications and services. Many of these services, such as multimedia messaging service (MMS) may serve to augment operator revenue from across a mature subscriber base while simultaneously acting a catalyst for replacement sales."

Nokia continued to dominate worldwide mobile phone sales during the second quarter of 2002 (see Table 1), thanks to the continued competitiveness of its entry-level Global System for Mobile Communications (GSM) portfolio. Motorola meanwhile, saw sequential growth from the first quarter of this year, while preparing to engage Nokia in Nokia's core GSM markets during the traditionally strong fourth quarter with the launch of the C330.



Samsung strengthened its position as the No. 3 vendor during the quarter, increasing its year-over-year sales by 46.4 percent. "Samsung is now on the verge of achieving 10 percent global market share during the latter half of the year. This is a psychologically important market share objective and further evidence that Samsung is clearly in Nokia's and Motorola's rearview mirrors," Prohm said.

While worldwide mobile phone sales experienced a slight increase in the second quarter of 2002, shipments into the channel (sell-in) totaled 97.5 million units, up 8.2 percent from the second quarter of 2001. Gartner Dataquest analysts said the sell-in statistics show further evidence that the relationship between global supply and demand has been well managed in 2002.

The once endemic problem of global inventory mismanagement has all but disappeared during 2002, thanks in large part to robust demand in the gray market. "Countries such as Saudi Arabia, Singapore, Hong Kong and the Philippines have become de facto distribution points for gray market terminals into the fastest growing markets in the Middle East and Asia," said Ann Liang, industry analyst with the Mobile Communications Worldwide research group for Gartner Dataquest in Asia/Pacific.

Gartner Dataquest’s outlook for replacement sales during the back half of the year remains steadfastly optimistic, particularly in Western Europe. "The frenzy of marketing activity around new services such as picture and photo messaging by mobile network operators in Western Europe is likely to fuel replacement demand for color mobile phones in the second half of 2002," said Ben Wood, senior analyst for Gartner Dataquest in Europe. "The extremely aggressive pricing of entry-level phones by some manufacturers may lead to a renewed offensive by certain network operators to increase their subscriber bases by once again offering low-priced prepaid packages at the end of the year."

"Overall, expectations remain high for a strong fourth quarter selling season worldwide, driven in part by the introduction of numerous new, low-cost terminals from leading manufacturers," Prohm said. "Therefore, we continue to believe that worldwide mobile terminal sales to end users will reach approximately 420 million units in 2002."

This research is published by Gartner Dataquest's Mobile Communications Worldwide research group. This group examines the opportunities in mobile communications with detailed coverage of the entire value chain of mobile services and equipment that are enabling the creation of a new wirefree networked economy. To keep up to date on the latest telecommunications issues, please visit Gartner's Telecommunications Focus Area at www.gartner.com/1_researchanalysis/focus/telecom_fa.html.

To subscribe to Gartner Dataquest programs, please call 408-468-8000. Reports can be purchase on the Internet at www.gartner.com.

Gartner Dataquest is the recognized leader in providing the high-technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software and services sectors of the global information technology industry.

Gartner, Inc. is a research and advisory firm that helps more than 10,500 clients understand technology and drive business growth. Gartner's businesses consist of Gartner Research, Gartner Consulting, Gartner Measurement and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has 4,000 associates, including 1,200 research analysts and consultants, in more than 90 locations worldwide. Fiscal 2001 revenue totaled $963 million. For more information, visit www.gartner.com.

CONTACTS: Tom McCall Laurence Goasduff (408) 468-8312 + 44 1784-487-195 tom.mccall@gartner.com laurence.goasduff@gartner.com

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