February 8, 1999
Nokia Takes the Lead as Wireless Makers
Sell 162.9 Million Phones in '98, Up 51%
By QUENTIN HARDY AND GAUTAM NAIK
Staff Reporters of THE WALL STREET JOURNAL
The fight goes to the Finnish.Makers of wireless phones sold a record 162.9 million units world-wide last year, a 51% increase from 107.8 million units in 1997, according to a closely watched industry think tank. Finland's Nokia Corp. scored the biggest gains, the report said, taking the top market-share position from Motorola Inc.
The report from Dataquest Inc. didn't include the dollar value of those sales, but analysts say a typical wireless phone has a wholesale price of slightly more than $170, valuing the market at more than $27.7 billion last year. Service providers often discount the phones to sign on people to their service contracts, making these phones seem cheaper at retail.
"There was some really explosive growth in the market," said Peter
Richardson, who wrote the report. Among the key markets, he said,
European service providers did well through sales of prepaid wireless
services, and Japanese consumers bought new styles of phones despite
that country's economic troubles. In the U.S., new plans offering cheaper calls over more of the country led to massive fourth-quarter purchases.
The report comes as Nokia prepares to launch a digital-cellular phone
intended to improve coverage for customers in the U.S. The "tri-mode"
phone works on older analog networks, as well as two versions of a digital standard known as CDMA, or code-division multiple access.
The Dataquest report said Nokia sold 37.4 million handsets last year, or 23% of the market, up 82% from 20.6 million units, a 19% share, in 1997. Motorola sold 32.3 million units for a 20% share, up 28% from 25.3 million units, or a 23.5% share, in 1997. Sweden's Telefon AB L.M.Ericsson was third, with 23.8 million wireless handsets sold, a 15% share,up 50% from 15.9 million units, or 15% of the market.
Officials at several of the companies in the report confirmed its general outlines. "It might be at the high end, but it is not far off," said Jan Ahrenbring, vice president of marketing at Ericsson. "About 15% would be right" for Ericsson's market share, he said, adding that his company expects more than 200 million wireless phones to be sold this year.
Nokia says it shipped 40.8 million phones to its distributors in 1998, about in line with Dataquest's count of phones actually sold.
Motorola disputed the Dataquest numbers. "They are light" on the actual number of Motorola phones sold, said James Caile, the company's vice president of marketing. Motorola doesn't disclose the number of phones it sells or its market share, but Mr. Caile acknowledged, "We gave up some share, particularly in the early part of the year."
Motorola underwent a massive reorganization last year in hopes of
becoming more customer-oriented. The Schaumburg, Ill., company
recently released a large variety of phones and is working on accessories such as an electronic organizer that fits onto its popular StarTac phone.
The report's big numbers underline how companies must now produce a
variety of products to service an increasingly diverse world market. Cell phones have evolved to become fashionable consumer products offered in various colors. Moreover, the range of radio systems used around the world means that popular phones may have different engineering requirements for different markets.
"The big suppliers will from now on launch more new phones every year; it used to be every two years," said Ericsson's Mr. Ahrenbring. "We will launch at least five new types" in 1999, he said.
Nokia's new phone is made specially for the U.S. market, according to
people familiar with the Finnish manufacturer's plans. While Europe and parts of Asia have a single digital standard for cellular phones, the U.S. has a hodgepodge of systems. The result is that a U.S. digital phone that works on one network typically doesn't work on another, leading to consumer complaints of spotty coverage and dropped calls.
The lack of a flexible digital phone has been conspicuous among carriers such as Bell Atlantic Corp. and AirTouch Communications Inc., which operate CDMA networks on two different and incompatible radio frequencies.
AT&T Corp. operates digital cell-phone networks using two different
radio frequencies and a standard known as TDMA, or time-division
multiple access. Since last year, however, AT&T has been able to offer its own "tri-mode" phones, built by Ericsson and Nokia, that work on the TDMA system. Because of the improved coverage of these phones,
AT&T was able to market an immensely successful one-rate calling plan
across the U.S.
Nokia's new phone is modeled after its extremely successful 6100 series, people close to the company said. Phones in the 6100 series cost $199 to $249 in the U.S., and Nokia's tri-mode phone is expected to cost a little more. |
