Nokia predicts 1.5bn mobile users by 2005

Brushing aside pessimism about the industry's medium term potential, Nokia's CEO says the mobile phone industry is on the verge of substantial growth.

In an interview with the Financial Times, Jorma Ollila, chairman and chief executive of Finland's Nokia, said that by 2005 there could be as many as 1.5 billion mobile phone users worldwide, 500,000 million more than currently exist. He said that this enormous growth would come from the US, and also from emerging economies such as China, India, Russia and Eastern Europe.

In Western Europe, where the market for new mobile phones is thought to be saturated, sales will be driven by replacement phones that include new features such as colour screens, digital cameras, picture messaging and games, he said. "There's a good chance the handset market will grow in volume by 10 to 15 per cent per annum during the next three years," Ollila told the newspaper.

Although the company declined to make sales predictions for 2003, Nokia is currently forecasting that 400 million handsets will be sold worldwide this year, with its share of the market at around 160 million units.

Indeed, August figures from research company Gartner Dataquest have already shown some small signs of a rebound in the beleaguered sector which after years of eye-popping growth has languished for 18 months.

In the company's most recent report on mobile phone sales, it said worldwide shipments totalled 98.7 million units in the second quarter of 2002, an increase of 0.8 per cent from the same period last year. Gartner agrees with Ollila's forecast of demand driven by innovation in the sector, also citing picture messaging (MMS) and other high-speed data applications as must-have services.

According to most estimates, Nokia dominates the mobile phone industry by a wide margin with about 35 per cent of the market. Motorola, Samsung, Siemens and Sony Ericsson follow, with about 16 per cent, 9.5 percent, 8.4 per cent and 5.4 per cent of the market respectively, according to Dataquest's estimates.

Also in the Financial Times report, Ollila said that mobile network infrastructure sales would continue to be flat over the coming years as operators hold off from spending, a trend which matches Nokia's recent performance. In its third quarter results, Nokia said that net sales were up 2 per cent from the same quarter a year ago to €7.2 billion. But, while sales in its mobile phones division increased by 7 per cent to €5.6 billion, its network division, which has been struggling for some time, was down 7 per cent to €1.5 billion.

© ENN