Samsung's success is eating into Nokia's market share

World sales of handsets leapt by an annual 40% to 153 million in the first three months of 2004, according to consultants Strategy Analytics.

The boom in cheaper camera phones combined with a surge in upgrades in the US, Europe and Korea to drive the resurgence, the report said.

But Nokia is missing out on the renewed boom, with its market share falling below 30% for the first time in years.

Analysts say the firm's troubles are partly due to its reluctance till recently to produce clamshell handsets, which have proved increasingly popular.

Gaining ground

The market leader's problems - including a 16% fall in first quarter profits to $816m (�462m) - created an opportunity for its competitors, all of whom built market share at its expense.

MOBILE MARKET SHARE Q1 2004 Where Nokia went wrong

Motorola, one of the poorer performers in recent years, saw its share of the global market grow to 16.5% from 15.3% in the first quarter of 2003 with unit sales up 50%, Strategy Analytics said.

The firm's profits tripled to $609m for the first three months of 2004.

Samsung and Siemens cemented their hold on the third and fourth spots, while SonyEricsson - another sufferer from poor performance in the past few years - also gained ground.

Overall, mobile makers are expected to sell 586 million phones this year, the survey said.

Nokia is likely to stage a recovery in the rest of this year by lowering prices thanks to its massive economies of scale.

Indeed, newspaper reports suggest the firm has started cutting prices charged to retailers on almost its entire range, in some cases by as much as 25%.

But analysts believe that could be just a short-term fix.

"When you're at the top of the pile as Nokia has been for so long now, you're there to be shot down," Strategy Analytics' Neil Mawston told the BBC's World Business Report.