GartnerGroup's Dataquest Says U.S. Digital Handset Sales Have Surpassed Analog Handsets in 1998.

SAN JOSE, Calif.--(BUSINESS WIRE)--Dec. 3, 1998--The U.S. handset market has experienced a major transition, as U.S. digital handset sales exceeded analog handset sales through the first three quarters of 1998, according to Dataquest, a unit of Gartner Group, Inc. (NYSE:IT).

U.S. digital handset sales totaled 10.1 million units through the first three quarters of 1998, while analog handset sales reached 7.9 million units. The U.S. digital handset market is now on pace to grow 170 percent in 1998.

"The analog-digital crossover, at last, signals the market's protracted transition to second-generation digital phones a full six years after they were first introduced in the United States," said Matt Hoffman, senior analyst and program manager for Dataquest's Mobile Communications Terminal Devices North America program. "Nokia has moved into the No. 1 position in the U.S. digital handset market because of the successful launch of its 6100 series phones and its strong association with the AT&T Digital One Rate."

Motorola is another vendor that is gaining market share (see Table 1). Mr. Hoffman said Motorola's increase is attributable to its strong GSM 1900 portfolio and to getting its non-StarTAC digital product into TDMA and CDMA channels. -0-

Table 1

U.S. Digital Handset Sale Market Share Estimates Through Three
Quarters

                                          1998 Market Share (%)

Company      1997 Market Share (%)       Through Three Quarters
Nokia                         19.8                         40.3
Ericsson                      41.3                         20.6
Motorola                       6.3                         11.5
Qualcomm                      17.4                          8.2
Sony                           6.8                          7.1
Samsung                        7.6                          6.2
LG                             0.0                          1.4
Others                         0.7                          4.6
Total                        100.0                        100.0
Source: Dataquest (December 1998)

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"The fast risers, Nokia and Motorola, have grown with strategies to diversify into all digital product segments," said Mr. Hoffman. "However, in defense of the Ericsson and Qualcomm strategies, handsets are just a portion of the companies' business, and they have strategic reasons for staying in their niches."

Much of the digital handset market expansion is due to the growth of the TDMA market. TDMA handset sales are growing faster than CDMA and GSM 1900 sales both in terms of raw units sold and percentage increase.

Additional information on the U.S. digital handset market is available in the upcoming Dataquest Perspective The Wireless Marketplace: Third Quarter 1998 Review. This report will include market share and size by digital segment. This report is scheduled to be available in the middle of December.

This report is produced by Mobile Communications Terminal Devices North America program. This program provides detailed actionable analysis of developments in the mobile communications terminals sector and the fast-changing distribution channels through which products reach the market. Additional information on this program is available on Dataquest's Web site at http://www.dataquest.com/dq/static/offer/programs/mobd-na.html.

To purchase the report or subscribe to this program, please call 800-419-DATA or 408-468-8009. More information about Dataquest's programs, descriptions of recent research reports, and full text of press releases can be found on the Internet at http://www.dataquest.com.

GartnerGroup's 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.

As the world's leading authority on IT, GartnerGroup provides clients with a wide range of products and services in the areas of IT advisory services, measurement, research, decision support, analysis, and consulting. Founded in 1979, with headquarters in Stamford, Conn., GartnerGroup is at the center of a global community with more than 11,000 client organizations served by analysts in 80 locations worldwide. Additional information about the company is available on the Internet at http://www.gartner.com.