Mobile Phone Shipments Gain In 4QMobile Phone Shipments Gain In 4Q

After a year of sagging sales, the worldwide mobile handset industry appears to be emerging into a scenario of rising sales, but with a new danger lurking -- cutthroat pricing could threaten future profits.

That is the scenario that is appearing on the radar of market research firms including Strategy Analytics, which reported Monday that the cell phone market recovered in the last quarter of 2009 after a full year of slowing sales. However, Strategy Analytics' Neil Mawston warned that growing competition could impact profits later in the year.

"The smartphone market will become ultra-competitive in 2010," said Mawston, the market research firm's director of global wireless practice. "The smartphone wars will be good news for consumers, but the fierce competition will inevitably place downward pressure on vendors' pricing and margins."

Nokia continued to pace the overall market by shipping 20.8 million smartphones in the quarter. That number represented a 38% gain over the same quarter in 2008. Even with the improved handset shipment rates in the quarter, all cell phone shipments for the full year dropped 4% to 1.13 billion from the previous year. Nokia and Samsung were the only handset providers that increased their global market share during the full year. Nokia's results were helped by strong sales of its E71 and E72 phones.

"The higher handset sales were driven by a combination of better [gross domestic product] growth, increasing consumer confidence, ongoing operator restocking, and a pipeline of high-profile handset launches from major brands such as Nokia and Samsung," Strategy Analytics said in explaining the industry's growth rates in the face of a worldwide recession.

The research firm added that recovering confidence among consumers, providers, and operators appeared to be helping sales, although some regions like South America still appear to be lagging. "It will not always be a smooth recovery and some regions will fare better than others," said Mawston.

While Apple's iPhone continued to capture the most publicity, Research in Motion's Blackberry phone captured the sales lead with some 10.7 million smartphones shipped in the quarter. Apple shipped 8.7 million iPhones, Strategy Analytics said, noting that RIM has been aggressively expanding its sales beyond its core North American territory as it moves to improve marketing in Europe and parts of Asia.