Wall Street continues to pick up strong signals for wireless handset sales.

Citing steady growth in new subscribers and strong demand for fancier phones, some analysts are boldly predicting that 2004 handset sales will easily surpass this year's record levels. That should help mighty

Nokia

(NOK) - Get Report

while presenting the industry's many also-rans with an opportunity to pick up share.

Thursday brought hopeful words from the market research analysts at IDC. More than a half-billion cell phones will be sold worldwide next year, according to the latest numbers from the Framingham, Mass., tech trend tracker. That projection marks an 8% increase over this year's tentative tally of 460 million units.

IDC isn't alone. Last month, another Boston-area research shop, Strategy Analytics, offered its own prediction that 507 million handsets would be sold in 2004. And with sales picking up in Eastern Europe, China and India, and a compelling lineup of new color-screen, Net-ready, camera-enabled phones hitting the market, plenty of people think selling 500 million handsets next year is within reach.

"That should be a slam dunk," says Sanford Bernstein analyst Paul Sagawa, who sees 10% growth in 2004.

But growth predictions can be a tricky business when applied to technology buying trends, as the late 1990s Net boom and bust demonstrated. Observers were arriving at wild conclusions about the supposed demand for products such as optical fiber, computer chips and cell phones even as the tech market collapsed.

Last cycle's failures aren't bound to be repeated, though. Sagawa, for one, says it's all a function of what side of the cycle the guesser happens to be on.

People usually underpredict in accelerating markets and overpredict in decelerating markets, says Sagawa. And seeing handsets as an accelerating market, Sagawa says the current predictions are likely to understate actual growth.

One of the engines driving the handset juggernaut is the surging cell-phone replacement rate.

Typically, about one-third of all users buy new phones each year. After that rate peaked at 43% in 1999, when users ditched their big analog phones for smaller digital models, the replacement rate fell to 27% in 2002, Sagawa says.

Now, industry watchers say, a crop of new phones with an array of features like video messaging, song-clip ring tones, email, Web browsing and

downloadable games will bring something close to a repeat of the 1999 upgrade party.

The likely beneficiaries of the cell-phone buying spree are your usual cast of characters. Nokia, the handset leader, with nearly 40% of the market and a dozen new phones to introduce to the preholiday market, stands to gain the most in terms of revenue.

But the field of challengers, especially from Asia, like

Samsung

,

Sanyo

,

LG

and

SonyEricsson

, look to make market share gains at No. 2

Motorola's

(MOT)

expense.

As originally published, this story contained an error. Please see

Corrections and Clarifications.