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Mobile phone sales fall for first time

Gartner cites lack of exciting products

Mobile phone unit sales in Western Europe decreased by 16.4 percent during the first quarter compared to the same quarter last year, according to Gartner, marking the market's first decline since the research firm began tracking mobile phone sales seven years ago.

The drop can be explained by a lack of exciting new products during the first quarter of this year, and the fourth quarter last year. Mobile operators are also signing customers to longer contracts, which means customers aren't upgrading as often as they used to, according to Gartner analyst Carolina Milanesi. An uncertain economic climate also had an impact.

Milanesi expects the market to pick up during the second half of 2008, when vendors have more interesting products lined up, and sales will end up more or less flat for 2008 in Western Europe.

Worldwide sales during the first three months increased by 13.6 percent compared to the same period last year, ending up at 294.3 million units. The boost is due in part to a sales increase in developing markets.

Nokia is the largest vendor, but its market share dipped by about 1 percent compared to the record setting fourth quarter. Its market share today stands at 39.1 percent.

In second place, Samsung had a stellar quarter, increasing sales by about 10 million units compared the first quarter of last year, and its market share now stands at 14.4 percent.

Motorola remained the third largest vendor, but its problems continue. Although it introduced new models, its portfolio is simply not competitive enough, and the company has even started losing ground in North America, according to Milanesi.

"It's very likely that Motorola is the fifth largest vendor by the end of the year, passed by both LG and Sony Ericsson," she said.

The difference between Motorola in third and LG in fourth place is now 6.3 million units. During the first quarter of last year, Motorola sold 31.6 million more phones than LG.

LG was the big winner during the quarter, with sales reaching 23.6 million units and a market share of 8 percent. As a result, it overtook Sony Ericsson to become the fourth largest vendor.

Sony Ericsson was hit by slow sales in Western Europe; its sales increased slightly, but not enough to hold on to the fourth spot.

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