Nokia leads a shrinking mobile market

Nokia is still number one in the global mobile phone sector, despite tough market conditions which saw a four per cent quarterly decline in sales.

The Finnish giant's sales fell from 33.5 million for the first quarter of 2001 to 32.5 million for Q1 2002. Market share rose from 34.4 per cent to 34.7 per cent, still a long way off the company's stated target of 40 per cent.

Nokia suffered because western Europe, one of its key markets, saw its second consecutive quarterly decline in handset sales.

Ben Wood, analyst at Gartner Group, said: "We have an application gap in western Europe. People are buying handsets with colour screens but there is a lack of applications to drive usage of GPRS."

GPRS handsets, which offer faster, always-on access to data services, have been available for some time, but services which use GPRS, such as MMS picture messaging, aren't expected to take off until 2003, Wood said, leaving European phone users with few reasons to buy GPRS handsets.

This gap has been illustrated by Samsung's recent decision to introduce a high-end colour screen handset into Europe without GPRS capability.

Samsung's approach flies in the face of the wishes of the mobile operators, who are eager to see GPRS usage take off as soon as possible.

But it has worked well with the buying public, as Samsung performed best in the quarter by a long way, racking up an impressive 48.6 per cent rise in sales from Q1 2001 to Q1 2002.

"Samsung is very good at looking at what end users actually require, and meeting that," said Wood.

Siemens also had a good quarter, racking up 24.1 per cent growth in year-on-year sales.

However, the newly merged Sony Ericsson had a tough time - the joint venture did not exist last year, but the two separate companies sold 8.3 million handsets between them in Q1 2001, but just six million in Q2 2002.

Wood said: "Sony Ericsson clearly stated that they were going to concentrate on low-volume, high-value products, and this is in line with that.

"The joint venture did break even, which is impressive, but until we see a really broad Sony Ericsson product portfolio on the market, it will be difficult to say how well they are going to do."

Motorola's sales grew nine per cent, based largely on a strong performance in the Asia-Pacific markets, where sales for the quarter exceeded expectations, growing 12 per cent from the year before.

The quarter saw the Asia-Pacific region, which excludes Japan, overtake Europe to become the world's largest market for mobile handsets.