Market leaders, ranking:

Nokia Motorola Siemens Samsung Ericsson Source: Gartner Dataquest

Global sales came in at 399.6 million phones during the year, down 3.2% compared with the previous year.

Gartner blamed the fall on the saturated markets in Europe and on the damage done to the new phone market in developing countries where the second-hand phone market is flourishing.

Other factors included the removal of subsidies by phone makers which used to sell handsets at sharply marked-down prices and competition from grey imports of phones from distributors which had bought cheap handsets and who were getting rid of their stock.

The negative growth rate marked a sharp turn-around from previous years when sales have soared.

The industry enjoyed an average 60% growth rate every year from 1996 to 2000, Gartner Dataquest said.

Market dominance

Finland's mobile phone group Nokia launched new models just before Christmas, securing it the position as the market leader.

Its global market share rose to 35% by the end of 2001 from 30.6% a year earlier.

But its position at the top is far from cemented.

"Nokia has to announce pretty sensational products if it wants to hang on to its market share," said Gartner Dataquest analyst Ben Wood.

Ericsson slips

Nokia's US competitor Motorola saw its market share remain fairly stagnant at 14.8%, up from 14.6% a year earlier.

Sweden's Ericsson, whose market share slipped to 5.5% during 2001, was knocked down a couple of pegs.

First, it was pushed out of third place by Germany's Siemens, then out of fourth by South Korea's Samsung Electronics.

However, Ericsson's mobile phone handset division has linked up with Japan's Sony.

If taken together, the Sony Ericsson venture would have accounted for an 8.5% market share.

Jointly, Sony Ericsson would have ranked three in the world in terms of market share.