Handset Market Booming

A new report says a record 810 million mobile phones were sold in 2005, a 20% increase over the previous year. Half of those sales were in emerging markets, underlining their strength, but quarterly earnings from Nokia also showed their downside — lower handset selling prices and narrower margins. The top six handset vendors consolidated their strength, now accounting for all but 23.5% of the world’s mobile phones. Motorola gained 2.6 points of share in the year, the most of the top six, but the analyst behind the report points out that a third of the phones it sold were RAZRs, saying it “is at risk of becoming a one trick pony”. Motorola CEO Ed Zander has said “The year of 2005 was the RAZR and the year of 2006 is more RAZRs,” making it sound like the company’s going to ride the product as far as it can. Clearly its aesthetics struck a chord with consumers, illustrating one way to get them to spend more money on handsets and keep average selling prices up. But until phone vendors can figure out how to better market expensive handsets in mature markets, pressure on margins will remain.

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