Mobile phones sales didn't quite reach 1-billion units in 2006, but managed to rise 21% over the previous year to 990,8-million.
According to Gartner, the top six manufacturers continues to consolidate their positions, with other vendors losing about 5% market share to account for just 14% of sales.
In the fourth quarter of 2006, mobile phone sales growth slowed slightly compared to previous year-end rates. Sales accounted for 284,2-million units and grew 21% from the fourth quarter of 2005.
The fourth quarter was characterised by a continuation of the trends seen earlier in the year as users in mature markets like Western Europe and North America were won over by slimmer phones and handsets with many features.
In emerging markets, more first-time users joined mobile networks.
Nokia's worldwide sales in the fourth quarter of 2006 reached 103-million units, giving the manufacturer a 36,2% market share – a rise of 1,2% over the same period in 2005. In 2006, Nokia sold close to 345-million mobile phones and achieved a market share of 34,8 percent, 2,3% better than 2005.
"Despite attracting criticism for lack of 'slim' products and a weak mid-range offering, Nokia was not only able to hold its No1 position, but grow market share," says Carolina Milanesi, principal analyst for mobile terminals as Gartner.
"Strong low-cost product offerings in the emerging markets, as well as feature rich products in the mature market, proved to be the right combination for Nokia in 2006."
Motorola grew its market share in the fourth quarter of 2006, selling just over 61-million mobile phones to end users across the world and achieving a market share of 21,5%. The year started well for Motorola as it benefited from the success of Razr in most markets in 2005. Unfortunately, the momentum slowed in the second half of the year. Although the Razr is still doing well in many emerging markets and on prepaid tariffs, this has not been enough to sustain the early success.
In 2006, sales to end users reached 209-million units, achieving a 21,1% market share. In the fourth quarter of 2006, the somewhat cold reception that greeted products such as the Krzr K1 and Motofone, coupled with the late shipping of some products, meant a considerable inventory build-up among distributors.
Motorola brings new products onto the market, it will be interesting to see how the company adds more features to its phones while continuing to be seen as on the cutting edge of design.
Although traditionally not a strong quarter for Samsung, the fourth quarter saw sales of 32-million mobile phones and an 11,3% market share. Overall sales in 2006 were slightly more than 116-million units, a 12% increase from 2005. Samsung's Ultra family of products proved very successful, and Gartner expects the Ultra II series announced at the 3GSM World Congress to do well.
While Samsung's focus remained on the high end of the market, it added more mid-tier and low-end products in the second half of the year to tackle emerging markets.
In 2007, Gartner expects operators' rollouts of technologies such as HSDPA and WiMax will help Samsung play a key role around the world. It remains to be seen, however, whether Samsung can rationalise its portfolio and cost structure, increasing not only its market share but also its profit margins.
Sony Ericsson finished the year with a strong quarter, selling 25,7-million mobile phones across the world and reaching a market share of 9%, a 2,1 point increase over the same period in 2005. Overall sales for the year reached 73,6-million units and market share grew by 1,1% to 7,4%.
Sony Ericsson was able to count on a rich portfolio of devices with music and imaging features, especially in the second half of the year. More recently, it has embraced 'thin' phones, and Gartner expects the slim W880 will help the company start 2007 on a positive note.
LG saw the gap between itself and Sony Ericsson widen further in the last quarter of 2006 as it sold 17,8-million mobile phones and reached a market share of 6,3%. Although the Chocolate phone continued to sell relatively well, LG relied on it to drive sales. Its price has dropped quite considerably in many markets, which put more strain on already stretched margins.
"The GSM Association has selected LG as the supplier for its '3G for all' initiative and, though this might help LG's market share, we remain concerned about its affect on profit margins. LG might end up relying on its Prada phone to mitigate such an impact," says Milanesi.
In the fourth quarter of 2006, BenQ Mobile dropped out of the top six players into ninth place. Parent company BenQ has stated that the company will focus away from Europe and limit itself to markets in Asia.
"Given the very negative publicity and the highly competitive nature of mobile phone markets, this sounds sensible, but Gartner remains highly skeptical of what the future holds for BenQ Mobile," Milanesi adds.
In the Eastern Europe, Middle East and Africa region, mobile phone sales continued to grow in the fourth quarter of 2006. End users bought 52,4-million new mobile phones during the quarter. This was 13% higher than in the fourth quarter of 2005.
In recent months, Samsung and LG increased their focus on emerging markets and tried to challenge the duopoly that Motorola and Nokia have established in the ultra-low-cost segment in particular. This has favoured operators and consumers alike as more people were offered a wider choice of handsets at competitive prices.
In 2006, just over 185-million mobile devices were sold in the region, an increase of 21% from 2005.