 With more customers on long-term contracts, fewer can shop around |
Economic uncertainty in Europe has taken its toll on mobile phone sales, with research showing consumers far less willing to buy costly models. Total handset sales fell 16% in Western Europe in the first quarter of 2008, according to research firm Gartner. The decline - the first Gartner has seen in seven years of tracking sales - reflected a lack of new products and general economic worries, it said. But strong demand in emerging markets meant total global sales rose sharply. They were 13% higher between January and March than a year earlier, driven by untapped demand in countries such as India and China. Tough time Gartner's figures reinforce recent updates by leading operators which suggest that mature mobile markets are in for a tough time over the next year. Last month, Nokia revealed that US sales had fallen by more than 40% in the first quarter and warned that, in terms of value, the industry could suffer a decline in sales this year. Nokia has performed much better in Europe but other operators, such as Sony Ericsson and Motorola, have continued to struggle there. Consumers are feeling gloomy across Europe, with figures published on Wednesday showing confidence in France about current economic prospects has fallen to an all-time low. Aside from general economic weakness, Gartner said the industry's desire to tie customers down for longer periods was a significant factor in curbing sales. "We are starting to pay the price of very high penetration and, more importantly, of very long contracts," said the firm's Carolina Milanesi. "Sales of high-end devices were also adversely affected by the economic slowdown that many countries are experiencing." Gartner expects sales in Europe to improve in the second half of the year as new models go on sale, but is forecasting little or no overall growth for 2008 as a whole. Nevertheless, Gartner is still predicting global sales growth this year of between 10% and 15% as sales in emerging market bolster the industry. Emerging markets accounted for more than 60% of total handset sales last year. In terms of market share, Gartner said Nokia had extended its leadership over the past three months at the expense of Sony Ericsson and Motorola.
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Sales of high-end devices were also adversely affected by the economic slowdown that many countries are experiencing
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