Unabated Optimism On Handsets

Got an email from Gartner just now saying they've upped their handset sales estimate for 2005 to 779 million units. Their initial estimate for the year was 720 million, which got bumped up in May to 750 million. Gartner also adds its prediction that handset sales will break the 1 billion per year barrier in 2009, when it says there will be 2.6 billion mobiles in use.

This comes as another analyst said last week it sees sales growth slowing to just 6 percent this year, whereas Gartner's 779 million prediction would show about 15% growth -- though that's still off from the 30% growth from 2003 to 2004. Gartner adds that sales remain strong around the world, with growth in emerging markets outpacing mature ones, but replacement sales in those mature markets continue.

My initial take on this is to lean towards Gartner's view, but like many other people, I'd like to wait for Nokia's announcement of its second-quarter results before committing to anything. Gartner says average selling prices are on the way down, too -- a development that's less harmful to the bigger, high-volume vendors. This looks to be playing out in second-quarter earnings reports already: number-four global vendor LG said falling prices and increased competition were behind its quarterly loss, while number three Samsung and number five Sony Ericsson both saw margins fall in the quarter.

Meanwhile, Motorola reported a very strong quarter, shipping a record number of handsets and gaining 3 points of share, which likely came from smaller competitors. Moto execs' comments also seem to echo Gartner's view that demand remains pretty high across various locations and demographics. There's a lot of expectation that Nokia will also report market share gains on Thursday, and strong, growing results from these two market leaders -- which together sell more than half the devices in the world -- would seem to indicate sales across the board remain solid.