Handset growth stymied in 2000

(Telephony) As expected, Nokia extended its lead over its handset rivals during 2000, according to statistics released from research firm Gartner Dataquest.

Nokia saw its global handset share rise to 30.6% in 2000, compared with 26.9% in 1999. Motorola’s share reached 14.9%, ahead of Ericsson’s 10% share. Siemens ranked fourth with a 6.5% share.

Long-term prospects for the mobile-phone sector look difficult, the firm noted. Few manufacturers are able to generate healthy profit margins, putting the necessary investments in next-generation handset development at risk. The next five years likely will be the most volatile in the history of the handset market, warned Gartner.

“That market is maturing, but it is still growing--albeit at a slower rate, primarily because the western European market that fueled the growth will slow down significantly as penetration rates push 70% to 80%,” said Bryan Prohm, senior analyst with Gartner Dataquest. “Odds are, the replacement market won’t evolve to encompass volumes needed … The bottom line is, don’t panic, but understand that the market is in a significant state of transition from western European growth to a market arguably looking toward Asia Pacific and the U.S. to light the fire.”

Share prices of leading handset manufacturers have fallen sharply in recent months as investors worry about profits in the coming years.