Over One Billion Cell Phones Will Be Sold This Year

Global shipments of mobile phones are expected to reach the watershed number of 1 billion this year, according to a report released Thursday. But there is a caveat: the shipment boom won't necessarily translate into profits for suppliers.

Basing its prediction partially on the strong momentum of 31 percent growth in shipments in the last quarter of 2005, Strategy Analytics said the 1 billion figure should be passed later this year. A strong driver is expected to be the low-cost handsets that are increasingly sold in developing countries.

"Total global handset shipment growth of 31 percent annually, driven largely by emerging markets such as India is at its highest rate for almost two years," said Neil Mawston, a director at the market research firm, in a statement. He expects the global growth rate to hit 22 percent in 2006 – representing an increase from the 817 million handsets sold in 2005.

The Strategy Analytics survey indicated that Motorola is closing the shipments gap with Nokia, the market leader. The market research firm said Motorola has recently closed to 13 market share from a 19 point gap in the first quarter of 2002.

"Motorola was the star performer in terms of volumes, but the growing need to compete in low-cost markets adds fuel to the theory that it has reached its profits-ceiling," said Chris Ambrosio, also a director at Strategy Analytics, in a statement. "Samsung and LG are also both feeling this profit pressure."