SAN JOSE--Worldwide mobile phone sales to end users reached 96.7 million units in the first quarter of 2001, keeping the wireless handset market on pace to reach as many as 500 million units this year, said Dataquest Inc. today.
However, Dataquest also warned that despite strong shipments in the first quarter, it will continue to be a difficult year for cellular phone handset suppliers. In addition to slower economic growth, suppliers will find fewer first-time handset buyers and have to count more on replacement sales to drive up unit volumes in the months ahead, said the San Jose research firm.
"The unbridled optimism of the past has been superseded by an atmosphere of increasingly reckless pessimism about the prospect for next-generation mobile telephony terminals and services," lamented analyst Bryan Prohm, who tracks mobile phones at Dataquest.
Two months ago, Dataquest chopped its forecast for handset sales to 507 million in 2001 from a previous estimate of 576 million. About 412 million phones were sold in 2000, based on that forecast (see March 20 story). The downward revision of cell phone forecasts across the industry has played a major factor in the sharp semiconductor downturn since the second half of 2000.
Dataquest said the first quarter of 2001 proved to be a period of "anomalous market behavior." The market research firm said high volumes of units shipped by handset makers in the fourth quarter of 2000 remained unsold in the channels at the end of the year. Dataquest said inventory overhang may have been as high as 30-to-35 million units worldwide. In addition, 5-to-10 million handsets were still in inventories at the phone makers, said Dataquest.
"The inventory glut caused a significant disruption of the normal dynamics of 'sell-in' and 'sell-through' throughout the first quarter of 2001," Prohm said. "The oversupply situation resulted in numerous leading OEMs selling more handsets to end users during the quarter than they actually shipped into distribution channels."
Nokia Group of Finland continued to gain market share in handsets during the first quarter, reaching 35.3% in Q1 (at 34,094,000 phones) compared to 27.9% last year, according to Dataquest. Motorola Inc. was second in unit sales at 13.2% of the market, or 12,773,000 handsets, and Siemens AG of Germany was third in the market with a 6.9% share, or 6,664,000 units.
In fourth place during the first quarter was Sweden's LM Ericsson, which had a 6.8% market share, or 6,542,000 handsets, followed by Samsung Electronics Co. Ltd. of South Korea with 6.3% of the units sold in Q1, or about 6,120,000 mobile phones, according to Dataquest's ranking.