Nokia ( NOK) gained market share and maintained its dominance against rivals Motorola ( MOT) and Samsung, although not quite at the fast pace the company suggested, according to a Gartner Dataquest report on second-quarter performance today.

The world's largest handset manufacturer logged a sales gain of 5% year-over-year, to 35 million units, from 33.4 million, largely driven by sales of entry-level GSM, or Global System for Mobile Communications, models. The company also logged a 7% sequential gain, from 32.5 million units sold to consumers in the first quarter this year.

Those numbers give Nokia a 35.6% market share, up from its 34.2% share in the second quarter last year. It's also up slightly from its 34.7% market share in the first quarter. These numbers are significantly less than Nokia's own estimates that it has more than 38% share of the market. The discrepancy is due to the difference in projected industry-wide handset volume between the company's own estimates and those of the research firm. Gartner predicts global handset volume will swell to 420 million units, compared to Nokia's reduced estimates of around 400 million.

All told, industrywide global handset sales crawled up 0.8%, to 98.7 million units, from 97.9 million units in the same period last year. In a prepared statement, the research firm said firms were preparing for a sales boost in the second half led by replacement sales, as major vendors are updating their portfolio of new phones with color screens and the ability to access next generation wireless data services. Based on Gartner's estimates, it now expects second-half sales to reach 227.6 million units, compared to the first half's 192.4 million units.

"The frenzy of marketing activity around new services such as picture and photo messaging by mobile network operators in Western Europe is likely to fuel replacement demand for color mobile phones in the second half of 2002," according to a statement from Ben Wood, a Gartner senior analyst in Europe. He added that high-tech phones such as Nokia's 7650 camera phone have been dramatically subsidized by some carriers to spur subscriber spending.


Worldwide Handset Sales to End User (Estimates for 2Q '02)
(Thousands of Units)
Company 2Q '02 Sales 2Q '02 Market Share (%) 2Q '01 Sales 2Q '01 Market Share (%) Growth (%)
Nokia 35,089 35.6 33,432 34.2 5.0
Motorola 15,496 15.7 15,326 15.7 1.1
Samsung 9,342 9.5 6,382 6.5 46.4
Siemens 8,247 8.4 7,245 7.4 13.8
SonyEricsson** 5,309 5.4 7,506 7.7 -29.3
Others 25,220 25.6 27,993 28.6 -9.9
Total 98,703 100.0 97,884 100.0 0.8
*Note: Ericsson sales only in 2Q01. Sony 2Q1 sales included in Others. Note: This table does not include iDEN sales to end users. Source: Gartner Dataquest (August 2002)

No. 2 handset contender Motorola saw sales gains of about 1%, to 15.5 million units, from 15.3 million units in the same period last year. Market share for the U.S.-based company remained flat year-over-year, at 15.7%. On a sequential basis, it saw a sales gain from the first quarter of 6%.

In yet another surprising quarter, No. 3 Samsung's handset sales growth blew past every competitor on the chart, logging a 46.4% growth to 9.3 million units, from 6.4 million in the same period last year, giving it a 9.5% share. On a sequential basis, however, the company's market share actually slid from its first quarter share of 9.6%. "Samsung is clearly in Nokia's and Motorola's rearview mirrors," said Gartner Dataquest's U.S. senior analyst Bryan Prohm in a statement.

SonyEricsson, a joint venture formed after Ericsson ( ERICY) spun off its handset assets, trailed the competition by losing market share in the second quarter. Its share fell to 5.4% from 7.7%, on sales of 5.3 million units, compared to 7.5 million units in the same period last year, a 29.3% drop.

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