Western European cell phone sales down 13% in Q1 2005

The Western European mobile handset market grew 13% YTY in Q1 2005, a 23% sequential decline from Q4 2004, which is slightly softer than expected. Wholesale/unsubsidised pricing bounced back 2.5% from the holiday gifting period, in-line with seasonal trends. During Q1 2005, both GSM & WCDMA sales slowed, which may have dampened mid-quarter re-order rates, GfK speculates.

For two years the market fragmented ? each model took an ever smaller share, diluting economies of scale in sourcing, manufacturing, distribution, and merchandising. This environment disfavours incumbent vendors and erodes ASP for everybody. However, the trend reversed in Q1 2005, led by Nokia 6230, which became the first European phone in two years to break the 5% share barrier. Consequently, Nokia gained significant share, as did Samsung and Motorola.

China showed double-digit unit growth in Q1 2005 with a very strong holiday sales period and cross-over sales from declining PHS market. CDMA declined in the quarter and similarly remains just a fragment of the China market. In GSM the same brands who gained significant share in Europe also led China in Q1 2005. Nokia finally locked up the final title belt it did not yet hold: it is now China’s #1 brand in value as well as units.