Worldwide Mobile Phone Sales in First Quarter are Indicative of Another Strong Year in 2006

Gartner: worldwide mobile phone sales totaled 224 million units in the first quarter of 2006, a 23.8 percent increase from the same period last year,. These strong results for the quarter have resulted in Gartner increasing its mobile phone sales forecast to 960 million units.

As mobile phone replacements in mature markets such as Western Europe and North America gave little sign of slowing down, strong sales in regions such as Asia/Pacific and Japan contributed to such a positive start in 2006. This strong start to 2006 is indicative of another strong year. The top two vendors, Nokia and Motorola, accounted for 54.3 percent of worldwide mobile phone sales in the first quarter of 2006 (see Table 1). Nokia was the favored brand in Western Europe, Central Eastern Europe, the Middle East and Africa combined and Asia whilst second preferred brand in the Americas. Wideband code division multiple access (WCDMA) sales played an important role in overall Nokia sales in the first quarter, which favorably impacted Nokia's average selling price for the quarter. Motorola achieved a market share of 20.3 percent, its highest worldwide market share since Gartner started to track the market on a quarterly basis in 2001 As other vendors embrace thinner phones, Motorola needs to continue to be a leader in new designs and focus on timely market launches to maintain its growth. Samsung recorded a year on year drop in market share of -1.0 percentage point. Across the regions, Samsung only grew its share in Western Europe and Latin America falling further behind Motorola at a worldwide level. Although LG, the number four player, has almost half of its market share, Samsung needs to react and work on building a more varied portfolio that includes lower end devices. Table 1 worldwide Mobile Terminal Sales to End-Users in 1Q06 (Thousands of Units)

Company	1Q06 Sales	1Q06 Market Share (%)	1Q05 Sales	1Q05 Market Share (%)
Nokia	76,088.4	34.0	54,960.1	30.4
Motorola	45,518.6	20.3	30,143.3	16.7
Samsung	28,080.5	12.5	24,479.8	13.5
LG	14,508.5	6.5	11,464.2	6.3
Sony Ericsson	13,599.6	6.1	9,905.8	5.5
BenQMobile	7,867.6	3.5	10,209.5	5.7
Others	38,378.2	17.1	39,829.5	21.9
TOTAL	224,041.4	100.0	180,992.2	100.0

Note: This table includes integrated digital enhanced network (iDEN) terminals. It excludes shipments from original design manufacturers to original equipment manufacturer. * 2004 BenQ Mobile volume refer to Siemens and BenQ sales combined. Source: Gartner Dataquest (May 2006) Regional Analysis In Western Europe, sales in the first quarter of 2006 reached 41.1 million units, a 12 percent increase from the same period in 2005. While consumers continued to be drawn into shops by new models and New Year's bargains, mobile operators were still able to sign up new subscribers to their networks. In Eastern Europe, the Middle East and Africa, sales of mobile phones to end users grew 30 percent over the same quarter in 2005 reaching 41.3 million units. Growth in this region was driven by strong new subscriber additions in countries such as Nigeria, Russia and Ukraine while countries such as Poland, South Africa and Turkey saw strong replacement sales. In the first quarter of 2006, the North American mobile handset market recorded sales just under 40 million units, up almost 16 percent from the same period last year. This was a record setting first quarter, and the second strongest quarter ever in North America since Gartner started tracking the market on a quarterly basis in 2001. The prepaid market continued to be a key area of strength as the tier two and three operators have started to pull a greater share of the new subscribers than they had in the past. Another contributing factor to the volume of sales was a continued strong upgrade rate as operators are offering attractive devices to encourage users to replace their dated devices. Sales of mobile terminals to end-users in Latin America were 24.6 million units for the first quarter of 2006, a 31 percent increase from the same period last year. Despite strong competition, operators did not add as many connections as they expected - slightly less than 14 million compared to more than 11.6 million the same quarter last year. Factors such as churn, upgrade and replacement partially offset the decline in net additions. In Asia/Pacific, a surge in demand from emerging markets such as China and India, as well as increasing replacement in mature markets, contributed to higher-than-expected growth in the first quarter of 2006. Total handsets sales totaled 64.4 million units in the first quarter of this year, up 36 percent from the first quarter of 2005. Low and ultra-low tier phones were a key driving factor for growth. In Japan, mobile terminals sales surpassed 12.6 million units in the first quarter of 2006, a six percent increase from the same period last year. Net new additions hit 1.5 million units for the first time in the past two years, supported by aggressive discount packages for air time charges and special terminals targeted at senior users and children. worldwide mobile phone sales

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