The South Korean manufacturer Samsung has muscled into the world's top three of mobile phone sales for the first time.

Mobile market shares

Nokia: 34.7% Motorola: 15% Samsung: 9.6% Siemens: 8.8% Sony Ericsson: 6.4% Source: Gartner

But according to the latest report from consultancy Gartner, the overall market contracted by 3.8% during the first three months of this year, continuing the negative trend set in 2001.

After growing by an annual average of 60% in the late 1990s, mobile phone sales have stagnated owing to the global economic slowdown, saturation in many markets, and consumer unwillingness to upgrade their handsets.

While most of the industry leaders held their market shares steady, the big surprise was Samsung, which now accounts for close to 10% of the market, up from 6.2% a year earlier.

The Korean firm pushed Germany's Siemens into fourth place.

New products

Samsung's emergence as a major player has been dramatic.

Over the past year, at a time when other major manufacturers have slowed investments in new technology, it has launched a string of products, and ploughed money into marketing.

Most of the firm's gains, and those of other resurgent manufacturers such as Motorola, have been at the expense of Ericsson.

The Swedish firm has slumped from second to fifth over the past couple of years, despite a mobile tie-up with Japan's Sony.

The combined firm has just a 6.4% share of the global market, but is now investing heavily in a string of new products.

Hope springs eternal

Manufacturers are now pinning their hopes on an upturn powered by the gradual shift towards third-generation (3G) technology, which allows mobile users a range of data-rich services such as movies and internet access.

Operators are launching 3G services, or close approximations to them, across major markets this year.

But there have been profound concerns about the mass appeal of 3G technology, and the launch of services could well be hit by delays.

In the meantime, some of the most crucial markets - notably in Europe - have little growth potential, with 70% and upwards of consumers already owning mobiles.