Gartner Dataquest Says Worldwide Mobile Phone Sales Exceeded 96 Million Units in First Quarter 2001.

Business Editors/Telecommunications Writers

SAN JOSE, Calif.--(BUSINESS WIRE)--May 31, 2001

Worldwide mobile phone sell-through sales reached 96.7 million units in the first quarter of 2001, and the market remains on pace for worldwide mobile terminal sales of as many as 500 million units by the end of 2001, according to Dataquest Inc., a unit of Gartner, Inc. (NYSE: IT and ITB).

Despite strong sales in the first quarter, Gartner Dataquest analysts warn that market success will be more difficult this year.

"The high annual growth rates in global mobile terminal sales realized during the previous decade will prove unsustainable over the long term. The market for new-to-wireless subscribers is decreasing and the replacement market is becoming the largest segment of annual sales," said Bryan Prohm, senior analyst covering mobile phones for Gartner Dataquest's worldwide telecommunications group. "The unbridled optimism of the past has been superseded by an atmosphere of increasingly reckless pessimism about the prospect for next-generation mobile telephony terminals and services."

Nokia continues to gain market share in mobile terminals, having surpassed 35 percent share for the first time during the first quarter of 2001. Nokia's market share position one year ago at this time was 27.9 percent. Siemens and Samsung continue to consolidate their respective market share positions, and Gartner Dataquest analysts said that one or both companies to are poised to make a break from their historic designation as "tier-two" manufacturers. In fact, Siemens surpassed Ericsson in the first quarter of 2001 to move into the No. 3 position.

Table 1
Worldwide Mobile Phone Sell-Through Sales Estimates for
First Quarter 2001
(Thousands of Units)

Company                 1Q01 Unit Sales          1Q01 Market Share (%)
Nokia                       34,094                      35.3
Motorola                    12,773                      13.2
Siemens                      6,664                       6.9
Ericsson                     6,542                       6.8
Samsung                      6,120                       6.3
Others                      30,496                      31.5
Total Market                96,689                     100.0
Source: Gartner Dataquest (May 2001)

The first quarter of 2001 proved to be a period of anomalous market behavior. An unprecedented volume of fourth quarter 2000 OEM shipments remained unsold as channel stock at the end of last year. Gartner Dataquest estimates that this inventory overhang may have been as high as 30 million to 35 million units. The analysts also believe that 5 million units to 10 million units of OEM factory inventory also carried over into 2001.

"The inventory glut caused a significant disruption of the normal dynamics of sell-in and sell-through throughout the first quarter of 2001. The oversupply situation resulted in numerous leading OEMs selling more handsets to end users during the quarter than they actually shipped into distribution channels," Prohm said.

This research is published by Gartner Dataquest's worldwide Telecommunications and Networking group. This group provides analysis for the full spectrum of telecom and networking issues. To keep up to date on the latest telecommunications issues, please visit Gartner's Telecom Marketplace Resource Center at www.gartner.com. To purchase the report or subscribe to Gartner Dataquest programs, please call 408-468-8000.

Gartner Dataquest is the recognized leader in providing the high-technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software and services sectors of the global information technology industry.

Gartner, Inc. is a research and advisory firm that helps more than 10,000 clients understand technology and drive business growth. Gartner's divisions consist of Gartner Research, Gartner Consulting, Gartner Measurement and Gartner Events. Founded in 1979, Gartner, Inc. is headquartered in Stamford, Connecticut and consists of 4,600 associates, including 1,400 research analysts and consultants, in more than 80 locations worldwide. The company achieved fiscal 2000 revenue of $859 million. For more information, visit www.gartner.com.