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Last Updated: Tuesday, 8 June, 2004, 12:56 GMT 13:56 UK
Nokia loses out in handset market
Nokia picture-messaging phone
Nokia has not done well in Western Europe
Nokia's share of the global mobile phone handset market fell sharply in the first three months of the year.

The industry leader's share of the market shrank to 28.9% from 34.6% in the same period in 2003, a survey by market research group Gartner found.

Overall, the global handset market grew strongly with shipments up 34% to 153 million units, while Nokia's competitors all gained market share.

Gartner analyst Ben Wood added Nokia's worst performance was in Western Europe.

"The big story is Western Europe, where Nokia has lost 10 percentage points of market share," he said.

The numbers are in sharp contrast to the 38% market share that Nokia claimed for itself during 2003.

Portfolio problems

Mr Wood added: "Nokia has two fundamental problems.

"One is its relationship with operators to provide them with personalised phones and the other is a product portfolio that is not competitive with the models offered by its rivals."

Russia was phenomenal in the first quarter. Brazil is just on fire and there's strong replacement in mature markets like Western Europe and North America
Ben Wood, Gartner
Handset sales did increase during the quarter for Nokia due to strong demand, but not as fast as its competitors.

In April, Nokia did warn it could not match the breakneck pace of growth in the market due to gaps in the mid-range of its handset selection - adding that profits would suffer as it beefed up its selection.

At the time, the Finnish firm also admitted it had lost out in the first quarter - but estimated its share of the market had only dipped to 35%.

The group's rivals are narrowing the gap with the firm, making it seem all the more likely it will fail to hit its own target of 40% of the market.

Global number two Motorola boosted its share of the market to 16.4%from 14.7% while South Korea's Samsung Electronics saw its share grow to 12.5% from 10.8%.

Meanwhile, Siemens share rose to 8% from 7.6% and Sony Ericsson's rose 0.9% to 5.6%.

Gartner - considered the best measure of actual consumer demand as it examines sales to consumers rather than to retailers - added that Nokia lost ground to all of its top six competitors.

The survey noted that the big 34% rise in shipments came as a result of emerging markets embracing mobile communications.

'On fire'

"Russia was phenomenal in the first quarter," Mr Wood said.

"Brazil is just on fire and there's strong replacement in mature markets like Western Europe and North America."

In mature markets, Gartner's survey found older handsets were being replaced with updated models using new technology such as cameras and colour screens.

Rising demand prompted Gartner to increase its outlook for total mobile phone shipments for the second time this year.

It now expects 600 million units to be shipped this year, up from March estimates of 580 million, and well up on the 520 million sold in 2003.

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