One billion cell phones to ship this year

Worldwide shipments of cell phones grew 31 percent in the first quarter from a year earlier and will reach 1 billion this year, says a report Thursday by research company Strategy Analytics.

The strong year-over-year increase was driven largely by demand in emerging markets such as India and Brazil, according to the Newton, Massachusetts, company. Growth was at its highest pace in almost two years, Strategy Analytics said. The projected 1 billion shipments for this calendar year would represent an increase of 22 percent from the 2005 annual total of 817 million.

The boom in sales surprised Strategy Analytics, which has been tracking mobile phone sales for about 25 years, because the first quarter is typically weak, analyst Chris Ambrosio said. Strong sales of replacement phones in developed markets, plus rapid adoption of mobile phones by new users in developing countries, drove the growth. Based on the first quarter result, 1 billion shipments for the whole year should be a conservative estimate, Ambrosio said.

Total shipments in the first quarter were 229 million units. However, the high volume didn't translate into better profits for some phone makers, according to Strategy Analytics. Competing for sales in low-cost markets put pressure on Motorola Inc., Samsung Electronics Co. Ltd. and LG Electronics Inc., the company said.

Nokia Corp., the global volume leader, shipped 75.1 million handsets in the quarter, up from 53.8 million a year earlier, and saw its market share grow slightly to 32.8 percent from 30.9 percent. However, runner-up Motorola saw a bigger gain in share, to 20.1 percent from 16.5 percent. Motorola shipped 46.1 million units, up from 28.7 million. Samsung, in third place, saw shipments grow but market share fall to 12.7 percent from 14.1 percent. LG and Sony Ericsson Mobile Communications AB rounded out the top five manufacturers.

Despite the growing demand for low-priced phones, handsets equipped with digital cameras are moving into the majority, according to Ambrosio. About half of all handsets shipped last year had cameras, and that share is expected to be about two-thirds this year, he said.

Handsets for 3G (third-generation) mobile data networks are still a small part of the market but growing fast, Ambrosio said. Strategy Analytics reported shipments of 44 million UMTS (Universal Mobile Telecommunications System) and 19 million EV-DO (Evolution-Data Optimized) handsets in 2005. It projects 90 million UMTS and 38 million EV-DO phones to ship this year.