IE 11 is not supported. For an optimal experience visit our site on another browser.

Cell-phone sales booming

Mobile phones are flying off the shelves before Christmas and sales are heading for record highs this year as the global economy recovers and low-priced models go on the market.
/ Source: The Associated Press

Mobile phones are flying off the shelves before Christmas and sales are heading for record highs this year as the global economy recovers and low-priced models go on the market.

THE BAD NEWS? Handset makers cannot keep up with demand.

In their efforts to avoid the dreaded mistake of 2001, when they miscalculated demand to the tune of 100 million units, phone producers are cautious and have run short of components.

The result is that demand is outstripping supply in most regions of the world, from emerging markets in Russia and India to saturated markets of the United States, Europe and Japan where consumers are swapping old models for fancy new ones.

“Gaps in supply first became evident in August and have become more acute in the last two to three weeks,” said a spokesman for Komsa, which supplies some 6,000 mobile phone shops in Germany as well as a few in the Netherlands and Poland.

Kenneth Jonsson, managing director for Nokia Mobile Phones in Russia and CIS countries singled out its new and low-priced 1100 and 2300 models. “Nokia unexpectedly needs to increase deliveries of these phones to Russia.”

France’s mobile operator SFR said this week it was running out of stock with its Live! series of picture phones.

Siemens Chief Executive Heinrich von Pierer said his firm had practically sold out. “We didn’t expect (demand) would be so strong,” he said during an Asian trip.

Mobile phones have never been cheaper or more powerful. Consumers can pick from a dozen different entry models for well below 100 euros ($120.60). A Siemens handset with colour display can be had for as little as 50 euros if bought with a pre-pay package. That is 25 euros less than just six to 12 months ago.

At Carphone Warehouse, a Siemens MC60 camera phone is 89.99 pounds ($155.10), the first time that Britain’s handset retail chain has a camera phone on a pre-pay contract under 100 pounds.

Market research group Strategy Analytics said on Thursday that just two weeks ago, it internally raised its full-year global sales targets to 504 million units, from the already bullish 492 million. That is a massive leap from the 429 million units of 2002 and the first significant growth since 2000.

“Prices have come down sharply and there’s also pent-up demand,” said analyst Neil Mawston, adding that Europeans replace their phones after some 30 to 35 months and that 2000 was a year in which many Europeans bought their first handsets.

Handset makers, which were planning for a market of 440 million to 460 million units, now quickly need to get their hands on more chips, colour displays, cameras and lenses.

“There is a shortage in some components — for colour screens and cameras — and we cannot order new components from one day to another,” a Siemens spokeswoman said.

Nokia, the world’s biggest handset maker with almost 40 percent market share, last week said it had some issues getting more components. U.S.-based Motorola, the world’s No.2 handset maker, said on Thursday that its sales were hurt by camera component shortages.

Analysts said Nokia had an edge over some of its rivals.

“It’s at times like this when relationships with components suppliers really count, and as the biggest player Nokia is in a good position,” said CSFB analyst Kulbinder Garcha.

Much the same goes for retail chains. Carphone Warehouse has good inventories, but it said more cautious retailers would have problems this Christmas in restocking depleted shelves.

Germany’s Komsa said increasing numbers of models are becoming scarce every day, mentioning top sellers such as Sony Ericsson’s T610, Samsung’s E700 and Motorola’s V series.

“No one need worry that they won’t be able to get a phone in time for Christmas, but they may have to compromise slightly on which model they get,” its spokesman said.

The fact that supply is tight means old inventories can at last be sold off. One source said that one quarter of a million old-style handsets with monochrome displays that were sitting in a warehouse were recently shipped to distributors.

Anything to fill the shops.

© 2003 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters.