Study Puts 2002 Cell-Phone Sales at 423 Million

Wireless handsets sold better than most people thought last year, according to technology research firm Gartner Dataquest.

Despite uncertain economic conditions that were thought to have clipped consumer spending, cell-phone sales rose 6% to more than 423 million units last year, up from about 400 million in 2001. Most of the big cell-phone companies had previously estimated industrywide sales at about 400 million units in 2002.

Gartner's report seems to indicate that Nokia(NOK) and other handset manufacturers' strategy of offering new toys in phones worked. Dazzling gadgetry such as color screens and the ability to save new ring tones -- and not pricey new wireless data services -- helped drive sales, the study concluded.

"Consumers embraced a variety of innovative handsets, especially those with color screens, rather than delaying replacement purchases because of an ongoing lack of compelling mobile data services," said Gartner senior mobile communications analyst Bryan Prohm in a statement. Prohm argued that the lack of compelling wireless services from carriers worldwide will be another incentive for higher sales this year, when carriers roll out new features to accompany the fancy handsets.

"As carriers and manufacturers determine how to better align devices with applications and services, the market may again prove stronger than expected during 2003," Prohm said.

Nokia led the charge again last year, maintaining a wide lead with sales jumping 8.4% to 151 million units in 2002. It helped the company secure a 35.8% market share, up from 35% in 2001. Nearly a third of the sales occurred in the critical fourth quarter, according to the study.

Gartner analysts cautioned that mobile operators might soon start steering customers away from Nokia phones, for fear of contributing to its near-hegemonic grip on phone sales.

Motorola(MOT) maintained its second-place position, despite difficult conditions. Motorola sales climbed 9.4% to 64.6 million units, giving it a 15.3% market share. Analysts said the company's strong CDMA lineup, and strong sales in North America and China, helped it stave off competitors.