Blockbuster year for mobile phones

With more than 1 billion phones sold globally for the first time, 2007 was a banner year for mobile phone sales. As sales continue to grow, the big questions this year are whether global market leader Nokia can expand in North America, and whether Motorola can stop its slide.

Worldwide sales of mobile phones ended up surpassing 1.15 billion units in 2007, a 16 percent increase from 2006 sales of 990.9 million, according to figures from Gartner.

Emerging markets, especially China and India, are now the driver for growth, with many people in the countries now buying their first phone.

Nokia continues to dominate. It sold 435 million mobile phones last year, and gained a market share of more than 40 percent for the first time during the fourth quarter, according to Gartner. During 2007, Nokia's market share was 37.8 percent.

It is followed by Motorola, Samsung, Sony Ericsson, and LG. Everyone except for Motorola, which lost its second place to Samsung during the fourth quarter, increased its market share.

For the full year, Motorola's market share was 14.3 percent, down from 21.1 percent.

Samsung increased its market share from 11.8 percent to 13.4 percent.

Sony Ericsson and LG saw their share increase by less than 1 percent, to 8.8 percent and 6.8 percent, respectively.

Looking forward to this year, sales will continue to grow, according to Gartner. Nokia has the chance to extend its lead even further, with growth in North America the key.

"In most markets, Nokia's market share is larger than 40 percent; in North America, it's close to 10 percent," said Carolina Milanesi, research director at Gartner.

The Finnish phone giant has tried, and failed, to crack the North American market for many years. But changes in the market will help Nokia, according to Carolina Milanesi.

"Verizon has said it plans to open its network, which might be more on paper than in reality. But North American carriers are starting to realize they need to be more flexible than in the past. For Nokia, and everyone else, it means not having to build Verizon-specific phones, and faster time to market," she said.

In 2008, Nokia will also need to continue to improve its portfolio, offering not only more applications and functions, but also novel designs and improved user interfaces.

Nokia has recently received criticism for not releasing phones equipped with touch-based user interfaces.

"I don't think it matters that Nokia is a little late to the market, as long as it gets it right. Nokia will have to 'wow' users, otherwise it will be crucified," said Milanesi.

Nokia was also late to the market with 3G phones, but became the biggest vendor in the end.

"Nokia built a platform, and was able to release a lot of phones, which made it No. 1," said Milanesi. She also thinks Sony Ericsson can grow its market share during 2008.

"Sony Ericsson has a very interesting lineup. With the addition of Windows Mobile, it has a chance to grow in North America," said Milanesi.

A big question for 2008 is the future of Motorola's mobile phone business. If it decides to sell, it's likely that the buyer will be a Chinese vendor, like ZTE.

"If it [ZTE] has the money," Milanesi said.