Mobile phone sales set to rise

Mobile phone sales in Taiwan are expected to grow by 4 percent this year as handset vendors introduce more models featuring multimedia services to spur new demand, a Taipei-based research center said in its latest market report.

"The growth momentum in the domestic market will come from replacement demand fueled by the launch of new services and new models with multimedia functions," Marty Kung (龔俊光), an analyst with Market Intelligence Center (市場情報中心), said in the report released last month.

The research center, part of the semi-official Institute for Information Industry, predicted sales of mobile phones would rise 4 percent to around 6.94 million units this year from an estimated 6.68 million units last year, Kung wrote.

While the annual growth rate was predicted to stay roughly flat compared with the estimated 3 percent expansion for last year, sales in terms of dollar value were expected to expand at an annual pace of 4 percent to NT$45.36 billion (US$1.4 billion) as Taiwanese manufacturers develop high-end models to maintain profitability, according to Kung's forecast.

During the first three months of the year, unit sales were predicted to climb 5 percent to 1.7 million phones from a year ago, as mobile phone vendors launch massive marketing campaigns to stimulate demand in the traditional high season, the report said.

Yet looking at the previous year, it was worth noticing that Taiwanese brands led by Inventec Appliances Corp (英華達), which sells its products under the OKWAP brand, suffered a setback in market share.

"International brands have eaten into their market share by slashing prices. In addition, these heavyweights have lavish marketing budgets" that greatly exceed those of local firms, Kung wrote.

In particular, BenQ Corp (明基) lost ground as it began the task of integrating Siemens AG's mobile phone unit after acquiring the money-losing division last year, the report said.

As a result, BenQ was unable to concentrate on developing new phones or marketing its products, it added.

Local brands only made up a total of 15 percent of the domestic market last year, according to statistics cited by Kung. He did not provide details of market share.

That figure compares with around one-third of the domestic market that Taiwanese brands grabbed in the first quarter of 2004, the report said.

Nokia Oyj of Finland and Motorola Inc of the US are fighting for top position here as they are in other markets around the world.

The two international brands have made up half of the domestic handset market over the past few years.

Globally, mobile phone sales are expected to increase by as much as 15 percent to 931 million units this year, up from 810 million units last year, the Stamford, Connecticut-based Gartner Inc said on Nov. 22.

Taiwanese handset makers collectively manufactured a total of 68.62 million phones last year, up 30.6 percent from 2004, according to the Market Intelligence Center's statistics.