May 9, 2006

The handset vendor market in the United States continues to run hot.

New figures from The NPD Group reflect an 11-percent growth in sales for the first quarter over the year-ago quarter.

The biggest beneficiary in the United States is Motorola Inc., which achieved a 29 percent overall market share, up two points from the fourth quarter.

The market analysis firm estimated that Americans purchased nearly 35 million handsets for about $2.3 billion in the first quarter.

In case you’ve been living in a cave beyond all news and human (or wireless) contact, the continued strength of the market is not surprising.

The surprise, at least to The NPD Group’s Neil Strother, research director for mobile devices, is the strength of the first quarter, which typically cools off after the holiday gift-buying season.

“These numbers reflect a very healthy market, and we’re seeing strong demand for replacement models and from new subscribers,” Strother said.

In an unrelated report last month, CIBC World Markets posed the rhetorical question “What Happened to Seasonality?” and said that carriers’ promotional activities are a central driver in the strong fourth-quarter-to-first-quarter sequence.

CIBC suggested that investors monitor changes in the mix of demand drivers, particularly any drop in carriers’ promotional activities, which may slacken somewhat in the coming summer months.

Following Motorola’s top position, Nokia Corp. and Samsung Electronics Co. Ltd. each garnered 18 percent market share in the United States; LG Electronics Co. Ltd. captured 15 percent.

A gaggle of handset vendors have low, single-digit market share: Kyocera Wireless Corp. at 4 percent; Sanyo Electronic Co. Ltd. and Sony Ericsson Mobile Communications L.P. at 3 percent; UTStarcom at 2 percent; and Research in Motion Ltd. and Palm Inc. at around 1 percent.

Broken down by technology, Motorola also leads the GSM market segment in the United States with 39 percent, followed by Nokia at 24 percent, and Samsung at 16 percent.

LG led first quarter market share for CDMA handsets with 31 percent, followed by Samsung with 20 percent and Motorola at 13 percent.

Bluetooth-enabled devices accounted for 18 percent of handsets sold in the first quarter, up from 9 percent in the second quarter of 2005.

The NPD Group compiles and analyzes mobile device sales based on more than 150,000 online customer surveys each month.

Surveys are based on a nationally balanced and demographically representative sample, with results projected to cover all U.S. consumers.

Source: RCR