Worldwide mobile phone sales set to drop through 2008

Sales of handsets are dropping in the heavily saturated markets of Western Europe, North America and Japan, stated new research from Gartner.

While the market is poised for double-digit growth in 2008 and 2009, with sales increasing 10.3% globally, the industry faces challenges with some regions projected to experience a decline in sales in 2008. Mobile phone sales growth will increasingly rely on emerging markets as mature regions, such as Western Europe, Japan and North America reach saturation.

Mobile phone sales in Western Europe are projected to reach 188 million units, a 1.5% decline from last year, while in North America, mobile phone sales are expected to total 185.7 million in 2008, a 5.3% increase from 2007. Mobile phone sales in Japan are estimated to reach 47.7 million units, a 9.1% decrease from 2007.

However, overall, worldwide sales of mobile phones will reach 1.28 billion units in 2008, an 11% increase from last year, according to Gartner. In 2007, worldwide mobile phone sales reached 1.15 billion units.

Worldwide mobile phone sales in the first quarter of 2008 reached 294.3 million, and Gartner expects sales in the second quarter of 2008 to be between 300 million and 305 million units.

Carolina Milanesi, research director for mobile devices at Gartner, stated: “For the second half of the year, we expect sales in the third quarter to be more than the second quarter results, but only moderately as both Motorola and LG issued warnings for a sequential drop in sales, as well as an economic environment that remains challenging. All the hopes for mobile phone manufacturers for the overall year-end growth results rest on the final quarter of the year when most new products will be introduced to the market and the normal seasonality will help boost sales.”

In Asia Pacific, mobile phone sales are forecast to reach 472.5 million units in 2008, a 17.9% increase from 2007.

“With a more mature market, mobile operators are seeing their service revenue come under pressure and, driven by lower flat-rate tariffs, demand for data services is starting to pick up, increasing demand for network investment,” Milanesi said. “Cost control and putting pressure on supplier pricing are the business norm of operators. Hence, mobile device vendors are experiencing increased pressure on device pricing.”