New research indicates that manufacturers shipments of new mobile phones reached an all-time high during the fourth quarter of 2005, but experts said that increasing device saturation and demand for cheap handhelds will likely drive down profits for the gadgets this year.
According to the latest market figures published by researchers iSuppli, wireless phone shipments rose to a record level of 241.5 million units during the final four months of 2005, pushing shipments for the entire year to just over 812.5 million units.
Those results exceeded the companys previous estimate of 239 million shipments in the fourth quarter, and 810 million units for all of 2005.
iSuppli analysts said that based on their estimates, the fourth-quarter total represents the single largest volume of wireless handsets ever shipped during a single four month period, trouncing the previous record of 200 million unit shipments tracked during the final quarter of 2004.
The handset shipments for the end of 2005 represent a 15 percent gain compared to the 210 million units produced during in the third quarter of last year, representing the largest sequential gain in volume tracked by the research firm since 2003.
In terms of vendor performance, iSuppli said that top-tier manufacturers such as Nokia and Motorola continue to gain market share away from smaller players, who only represented 19 percent of all shipments.
Manufacturers outside the top-tier accounted for 25 percent of all shipments in 2004.
"This development indicates the mobile-phone market is becoming increasingly competitive, and only the big and strong [manufacturers] can survive," said Scott Smyser, analyst with iSuppli.
Several market factors are making it much harder for smaller vendors to compete, Smyser said, namely pressure from both the top and low ends of the mobile phone market.
On one hand, emerging regions of the world are buying up the low-cost handsets most profitably built by larger companies with substantial manufacturing and marketing infrastructure, while on the other hand, customers in more established regions are looking for cutting-edge devices made specifically by the big name providers.
As a result, market leader Nokia recorded the greatest market-share growth of all phone manufacturers during the fourth quarter and for all of 2005.
The Finnish company accounted for just under 35 percent of all shipments during the fourth quarter, compared to 32 percent for the third quarter, and claimed roughly 33 percent of the market for the entire year, a gain of 3.5 percent over 2004.
iSuppli said that Motorola also posted improved numbers for 2005, accounting for just under 18 percent of all handset shipments, an increase of over 3 percent compared to the 14.7 percent of the market it represented in 2004.
Motorolas performance was driven largely by the success of its RAZR line, which accounted for approximately 30 percent of the companys fourth-quarter shipments.
Rounding out iSupplis top-tier of manufacturers for the quarter were Samsung, LG Electronics and Sony-Ericsson.
In terms of technology, iSuppli reported that devices based on GPRS (General Packet Radio Service) technology accounted for the largest volumes of all phone types in 2005, representing 51.6 percent of all shipments.
Phones using the EDGE (Enhanced Data GSM Environment) architecture increased shipments to 75 million units in 2005, posting a significant gain over a total of 25 million units in 2004.
Handhelds based on 3G Wideband Code-Division Multiple Access (W-CDMA) technology were particularly strong in Europe, driving 50 million worldwide unit shipments for the year.